Thursday, 14 October 2010

Chinese forex reserves hit record, Singapore's economy shrinks

China's foreign exchange reserves has hit a record even as its trade surplus shrank in September. Bloomberg reports:

China’s foreign-exchange reserves, the world’s largest, surged by a record to $2.65 trillion at the end of September, adding fuel to complaints that the nation’s curbs on gains in the yuan are undermining the global recovery.

Currency holdings rose about $194 billion in the third quarter, today’s statement from the People’s Bank of China showed...

The median forecast in the survey of eight economists was for an increase to $2.5 trillion. Exports rose a less-than- forecast 25.1 percent from a year earlier in September and imports climbed 24.1 percent, leaving a trade surplus of $16.9 billion...

Chinese banks extended a more-than-estimated 595.5 billion yuan ($89 billion) in new local-currency loans last month, the People’s Bank of China said in today’s statement. The median forecast in a Bloomberg News survey of 18 economists was 500 billion yuan.

The foreign exchange reserves data helped keep the renminbi exchange rate in the spotlight on Wednesday.

Non-deliverable yuan forwards rose 0.1 percent to 6.4529 per dollar as of 5:30 p.m. in Hong Kong, suggesting appreciation of more than 3 percent in the next year. The yuan was at 6.6641...

The yuan is strengthening at the fastest pace in five years, advancing 1.7 percent last month against the dollar after the end of an almost two-year peg in June.

Another currency that could be set to rise is the Singapore dollar. Channel NewsAsia reports today:

Singapore's central bank will keep its monetary policy of a modest and gradual appreciation of the local currency.

In its twice-yearly policy statement, the Monetary Authority of Singapore said it will increase the slope of its policy band slightly.

However here will be no change to the level at which the band is centred.

Interestingly, the latest policy announcement comes as the Singapore government reported a contraction in third quarter GDP. Again from Channel NewsAsia:

Singapore's GDP expanded by 10.3 percent on a year-on-year basis in the third quarter of 2010.

On a quarter-on-quarter basis the economy contracted by 19.8 percent, a reversal from the growth of 27.3 percent in the previous quarter.

The advance estimates released by the Ministry of Trade and Industry (MTI) on Thursday said that the Singapore economy remains on track to achieve the overall growth forecast of 13 to 15 percent for the whole of 2010.

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