Taux de change économie chine

CURRENT EVENT

China Foreign Exchange Reserves Extend Slump – Blomberg Business

In 2014, China foreign exchange reserves were amounted to 3,9 $ trillion according to data world bank.^[1] They hold the highest foreign exchange reserve in the world.

In December, the colossal Chinese foreign exchange reserves declined record, falling to their lowest level in first-ever year, according to official figures released Thursday 7 of January. This drop came from a very high bill due to sales of massive dollars in which Beijing’s aim was to support the value of the yuan.

According to the Peoples’ Bank of China, China currency hoard fall by a record 108 $ billion and is now 3,33 $ trillion USD in December. The reserves fell by more than half a trillion dollars (500 billion) in 2015: they reaches their biggest decline record.

On Thursday the yuan has reached its lower value for 5 years. It was due to unusual low reference rates of the BPOC. In order to stabilize its currency china set up a new yuan index in December. This index is composed of 13 currencies as opposed to what was happening before when the yuan was indexed only on the US dollar.

The depreciation of the Yuan contributes to the weakening of Chinese shares leading to a plunged of 7.2% of the Chinese Stock Exchange (China’s CSI 300 Index) on Thursday 7th January.

The Chinese government will continue to allow depreciation of the yuan against the dollar until the foreign reserves drop to 3$ trillion.  

The Chinese authority are worried about the situation, it could have been worst if it wasn’t for the huge Chinese currency reserve. However, in the long term, it is likely that the yuan will continue to weaken and capital to leave the nation.

The annual Gross Domestic Product (GDP) growth of China expanded 6.9 % last year, it represent the slowest pace since 1990 according to the median forecast of economists by Bloomberg. In fact, according to “World Bank / World perspective University of Sheerbroke”^[2], before 1990 the pace of annual economic trend was much more sustained. For example, in 1964 it expanded 18,3%, in 1965 17%, in 1970 19,4%... This is almost three times more than today. Moreover, on January 19th the government will release fourth-quarter gross domestic product data that will probably be worse.

Zhao Yang, a chief China economist at Nomura Holdings Inc., affirmed that when there are capital outflows, it’s difficult for the central bank to limit the loss in foreign exchange reserves. The Popular Bank of China didn’t expect that the yuan would depreciate so much and that’s why the reserves drop was so substantial.

In order to stabilize its currency China must take long-term and large scale monetary measures.