The yuan dropped the most in almost two weeks as the Chinese central bank lowered the currency’s daily reference rate and Federal Reserve officials indicated that US interest rates would be raised this year.
The People’s Bank of China cut the yuan’s fixing by 0.11 percent, the most since Sept. 10, to 6.3676 per US dollar. That was after the greenback rallied the most since July 1 on Friday last week.
Three US policymakers, including San Francisco Federal Reserve President John Williams, argued over the weekend that an increase in borrowing costs is still warranted at one of the central bank’s two remaining meetings of the year.
US stocks tumbled on Friday last week as the Fed Reserve’s decision not to tighten spurred concern about the global economic outlook.
“The yuan is being pressured by a stronger dollar and weaker sentiment from Western equity markets,” said Eddie Cheung, a foreign-exchange strategist at Standard Chartered PLC in Hong Kong.
“In the short term, the yuan will remain stable due to President Xi Jinping’s (習近平) US trip, the International Monetary Fund’s [IMF] decision on the reserve currency basket and China’s goal of closing the gap between the onshore and offshore rates,” he said.
The onshore yuan, which is allowed to diverge from the central bank’s fixing by a maximum 2 percent, fell 0.07 percent to 6.3687 a dollar in Shanghai, China Foreign Exchange Trade System prices showed.
That was the currency’s biggest decline since Sept. 9.
The freely traded offshore yuan dropped 0.19 percent to 6.3991 in Hong Kong, according to data compiled by Bloomberg.
The yuan should be more flexible and the Chinese government has no intention of pegging the currency to the US dollar in the long term, Jin Zhongxia (金中夏), China’s representative to the IMF, said in Washington on Friday last week.
The nation has adopted a series of measures to satisfy the IMF’s requirements to include the yuan in its Special Drawing Rights, Jin said.
Xi is visiting the US from today until Friday.
Asia’s largest economy is not as weak as it might look and “no collapse is nigh” in the aftermath of the stock-market plunge and currency devaluation, according to the third-quarter China Beige Book, published by New York-based CBB International.
“Perceptions of China may be more thoroughly divorced from facts on the ground than at any time in our nearly five years of surveying the economy,” CBB president Leland Miller wrote in the report.
NOTABLE SHIFT: By 2030, 50% of all laptops would be assembled in Southeast Asia, while Taiwan would still mostly focus on research and development, a report said Global laptop and desktop computer supply chains are expected to shift significantly away from China in the next 10 years, a Market Intelligence & Consulting Institute (MIC, 產業情報研究所) report said. By 2030, only 40 percent of global laptop production would remain in China, said the report, which was released on Thursday. “The reshuffling of the global supply chain will be one of the most important trends in the next 10 years,” the institute said in the report. “In the long run, key component makers will follow laptop assemblers in moving out of China.” The Taipei-based institute predicted most key component makers
NO VIRUS BLUES: A SEMI Taiwan official said that the virus does not slow down the global semiconductor industry’s investment in manufacturing equipment The production value of the nation’s semiconductor industry is expected to grow 16.7 percent this year from last year, outpacing the global industry’s 3.3 percent growth, industry association SEMI said yesterday. That would help Taiwan safeguard its second spot in the global semiconductor market with a production value of more than NT$3 trillion (US$102.73 billion), SEMI Taiwan president Terry Tsao (曹世綸) told a media briefing in Taipei for the Semicon Taiwan trade show beginning today. The global semiconductor industry’s production value is expected to increase to US$426 billion this year, SEMI said. In terms of semiconductor equipment investment, equipment billings from Taiwanese firms
Intel Corp has received licenses from US authorities to continue supplying certain products to Huawei Technologies Co (華為), a company spokesman said yesterday. Washington has been pushing governments around to world to squeeze out Huawei, saying that the telecom giant would hand data to Beijing for espionage. From Monday last week, new curbs have barred US companies from supplying or servicing Huawei. This week, the state-backed China Securities Journal reported that Intel had received permission to supply Huawei. China’s Semiconductor Manufacturing International Corp (SMIC, 中芯國際), which uses US-origin equipment to make chips for Huawei and other companies, last week confirmed that it had sought
Merck Group Taiwan yesterday said that it plans to invest substantially on expanding its fab in Kaohsiung’s Lujhu District (路竹) to better serve its local customers, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電). The company said it plans to expand its production space by 50 percent in the next five years and its workforce by about 40 percent, Merck Group Taiwan managing director Dick Hsieh (謝志宏) told a media briefing in Taipei. Hsieh declined to disclose investment details, but said that the latest investment would exceed the total amount Merck has invested in Taiwan over the past few years. Those investments would be