China’s central bank is probably using stealth measures to intervene in the foreign-exchange market and shore up its currency reserves, according to Daiwa Capital Markets Inc.
The People’s Bank of China (PBOC) might have bought foreign currency from local banks, used the forwards market to prop up the yuan and asked the nation’s sovereign wealth fund to liquidate overseas assets, Daiwa analysts Kevin Lai (賴志文) and Junjie Tang (唐俊杰) wrote in a note on Tuesday.
While Lai did not provide any direct evidence in the note, he said in an e-mailed response that his conclusions were based on a “logical deduction.”
China’s foreign-exchange stockpile, the world’s largest, shrank by US$28.6 billion last month, the smallest decline since June last year, to US$3.2 trillion. That was lower than the US$40.9 billion decrease predicted in a Bloomberg survey of economists, and compares with December last year’s record drop of US$108 billion as the monetary authority supported the yuan.
“As everyone is watching the foreign-exchange reserves number so carefully, it is important for the government to show a nice number,” Hong Kong-based Lai said. “Otherwise there will be market panic.”
China’s State Administration of Foreign Exchange (SAFE) yesterday said on its microblog that assets of the nation’s sovereign wealth fund, China Investment Corp (CIC, 中國投資公司), are not included in the country’s foreign-exchange reserves. SAFE, which did not name Daiwa, said its reserves are ample.
The PBOC did not immediately reply to a faxed request for comment. Two calls to CIC’s press office went unanswered.
The monetary authority launched a two-pronged attack on yuan speculators earlier this year, choking outflows from the mainland while mopping up the currency offshore. The nation’s defense of the yuan depleted its foreign-exchange reserves by US$513 billion last year, the first annual drop since 1992.
The purchase of foreign-currency assets and repayment of overseas debt by companies and individuals contributed to the drop, PBOC Deputy Governor Yi Gang (易綱) was cited as saying by Market News International.
Bloomberg Intelligence estimates that a record US$1 trillion fled overseas last year. The official foreign reserves data do not necessarily give a comprehensive picture because non-PBOC institutions might absorb flows, Goldman Sachs Group Inc economists wrote in a note on Monday.
This week’s undoing of the TerraUSD algorithmic stablecoin and its sister token, Luna, has ramifications for all of crypto. First, there is the immediate impact: The rapid collapse of a once-popular pair of cryptocurrencies sent a ripple effect across the industry, contributing to plummeting coin prices that wiped hundreds of billions of market value from the digital-asset market and stoked worries over the potential fragility of digital-asset ventures. Then there are the knock-on effects. In addition to delivering punishing losses to individual users and investment firms, the spectacular failure of a market darling like Terra threatens to have a cooling effect
China’s biggest chipmaker has cut its outlook for the second quarter, joining a growing list of manufacturers warning about the fallout from lockdowns aimed at containing the country’s worst COVID-19 outbreak in two years. Semiconductor Manufacturing International Co (SMIC, 中芯) estimates a month-long lockdown in Shanghai could spur component shortages and logistics tangles, and erase about 5 percent of its output in the second quarter. “We are trying our best to mitigate the impact on product delivery,” SMIC Chairman Gao Yonggang (高永崗) told analysts on a call yesterday morning. “We are still assessing the actual impact as many suppliers restart their
DISRUPTIONS: The war in Ukraine, China’s lockdown measures, rising interest rates and inflation have thrown a wrench into business plans made years in advance Samsung Electronics Co is talking with foundry clients about charging as much as 20 percent more for making semiconductors this year, joining an industry-wide push to hike prices to cover rising costs of materials and logistics. Contract-based chip prices are likely to rise around 15 percent to 20 percent, depending upon the level of sophistication, people familiar with the matter said. Chips produced on legacy nodes would face bigger price hikes, while new pricing would be applied from the second half of this year, they said, adding that Samsung has finished negotiating with some clients and is in discussions with others. Samsung’s decision
material SHORTAGE: Even as workers are about to return, Quanta lacks operating supplies, while Pegatron reported its lowest revenues in 11 quarters, the companies said Taiwan’s major Apple Inc supplier cut its outlook for the second quarter, joining a growing list of manufacturers warning about the fallout from lockdowns aimed at containing China’s worst COVID-19 outbreak in two years. Quanta Computer Inc (廣達電腦), which assembles MacBooks, expects a 20 percent quarterly fall in notebook shipments and a squeeze on margins this quarter due to the lockdown, a company representative said on Friday during an earnings call. The impact from supply chain disruptions could last until the end of the year, she said. The company’s Shanghai factory has been operating under tight restrictions since the middle of last month,
RSS