Chinese officials are voicing support for their tumbling currency and intervening to bolster it just as the California-based Pacific Investment Management Co (PIMCO) says the yuan is poised to fall further.
Bets against the yuan will fail and calls for a large decline are “ridiculous,” said Han Jun (韓俊), the deputy director of China’s office of the central leading group for financial and economic affairs.
Another official said investors misunderstood central bank currency shifts last week that send the yuan down.
Photo: AP
PIMCO is betting the US dollar will rise against its Chinese counterpart, said Luke Spajic, a portfolio manager in Singapore for the US$1.47 trillion global investment management firm.
“We believe the bullish trend of the US dollar will remain intact and that the changes made to the Chinese currency regime portend additional scope for the yuan to weaken over the next six to 12 months,” he said in a report issued yesterday in Asia.
The divergence highlights the challenge investors face in interpreting China’s decision to reduce the yuan’s fixing rate last week, a move that sparked speculation officials felt compelled to implement emergency measures to stem a slowdown in economic growth. The currency tumbled to the lowest level in almost five years against the dollar on Thursday last week.
“It is pure imagination that the Chinese yuan will act like a wild horse without any rein,” Han said on Monday in New York.
Short selling “will not succeed,” he said, adding that policymakers are determined to ensure yuan stability.
Investors misunderstood the People’s Bank of China’s intentions, Ma Jun (馬駿), chief economist at the central bank’s research bureau, said in comments on Monday on its Web site.
The fixings are based on the previous day’s closing price and changes to the basket of currencies against which the yuan is valued, Ma said.
Downward pressure on the yuan will ease after investors absorb a shift to valuing it versus a basket of currencies and away from linking it to the dollar, Ma said.
China yesterday kept the yuan’s reference rate stable for the third day in a row. The currency fell 0.08 percent 6.5749 per dollar as of 2:44pm in Hong Kong, according to prices compiled by Bloomberg.
The central bank has repeatedly intervened in the offshore yuan market since Monday to support the currency and crack down on speculators, according to people familiar with the matter.
The cost of borrowing yuan in Hong Kong surged to a record amid speculation intervention by the central bank is draining the supply of the currency. The overnight Hong Kong Interbank Offered Rate yesterday climbed 53 percentage points to 66.82 percent.
The result is that the strategy of borrowing currency and then selling it in the hope that it will fall has become more expensive than ever.
Spajic said PIMCO is not just wagering the yuan will decline.
The report says it is also betting against a basket of other Asian emerging market currencies.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day