Latest news with #ChristopherWong
The Star
3 days ago
- Business
- The Star
China's yuan slips as PBOC appears to reinforce currency stability via guidance fix
SHANGHAI: China's yuan slipped against the dollar on Tuesday, as the central bank set a slightly weaker-than-expected midpoint fixing for the second day in a row, a signal that investors interpreted as an official intention to reinforce currency stability. Most emerging market currencies strengthened to reflect the broad dollar weakness, as investors anxiously awaited fresh developments in U.S. President Donald Trump's trade policy and ongoing concerns over the U.S. fiscal outlook. However, the yuan underperformed its peers as the central bank pivoted from preventing excess losses in the Chinese currency over the past six months to slowing yuan rallies, currency traders and analysts said. "We believe policymakers are likely to still adopt a measured approach to appreciation like how they took on a measured approach when USD/RMB was trading higher previously," said Christopher Wong, FX strategist at OCBC Bank. The yuan has strengthened about 1.1% to the dollar so far this month, below gains seen in other Asian currencies, such as the Korean won or Taiwan dollar. Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1876 per dollar, and 34 pips weaker than a Reuters' estimate of 7.1842. "In the near term, the PBOC may turn more cautious against yuan appreciation bias if the dollar sell-off persists," said Ken Cheung, chief Asian FX strategist at Mizuho Bank. "In this sense, the PBOC may use the yuan fixing to smooth out yuan appreciation bias amid the dollar decline, driving the yuan basket index lower to support export sector." The CFETS yuan basket index, a gauge that measures the yuan's strength against its major trading partners, eased to 95.8 on Tuesday and has lost about 5.6% so far this year. The spot yuan, however, has gained 1.6% versus the dollar. As opposed to a persistently strengthening bias in the official guidance fix since November, the weaker-than-expected fixing discouraged market participants from testing new highs in the yuan, said a trader at a Chinese bank. As of 0349 GMT, the onshore yuan was 0.05% lower at 7.1903 per dollar, while its offshore counterpart was down about 0.09% in Asian trade to 7.1840. Seasonal demand also weighed on the yuan, as many overseas-listed Chinese companies usually have higher foreign exchange needs to make dividend payments to their overseas shareholders between May and August. Separately, the market largely shrugged off April industrial profit data, which picked up pace, giving policymakers cause for optimism that recent stimulus efforts are helping to keep the economy afloat despite trade tensions with the United States. Investors will look to May manufacturing activity data due on Saturday for more clues on the health of the economy. - Reuters
Business Recorder
3 days ago
- Business
- Business Recorder
China's yuan slips as PBOC appears to reinforce currency stability via guidance fix
SHANGHAI: China's yuan slipped against the dollar on Tuesday, as the central bank set a slightly weaker-than-expected midpoint fixing for the second day in a row, a signal that investors interpreted as an official intention to reinforce currency stability. Most emerging market currencies strengthened to reflect the broad dollar weakness, as investors anxiously awaited fresh developments in US President Donald Trump's trade policy and ongoing concerns over the US fiscal outlook. However, the yuan underperformed its peers as the central bank pivoted from preventing excess losses in the Chinese currency over the past six months to slowing yuan rallies, currency traders and analysts said. 'We believe policymakers are likely to still adopt a measured approach to appreciation like how they took on a measured approach when USD/RMB was trading higher previously,' said Christopher Wong, FX strategist at OCBC Bank. The yuan has strengthened about 1.1% to the dollar so far this month, below gains seen in other Asian currencies, such as the Korean won or Taiwan dollar. Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1876 per dollar, and 34 pips weaker than a Reuters' estimate of 7.1842. 'In the near term, the PBOC may turn more cautious against yuan appreciation bias if the dollar sell-off persists,' said Ken Cheung, chief Asian FX strategist at Mizuho Bank. Yuan falls to 2007 lows as US tariffs on China kick in 'In this sense, the PBOC may use the yuan fixing to smooth out yuan appreciation bias amid the dollar decline, driving the yuan basket index lower to support export sector.' The CFETS yuan basket index, a gauge that measures the yuan's strength against its major trading partners, eased to 95.8 on Tuesday and has lost about 5.6% so far this year. The spot yuan, however, has gained 1.6% versus the dollar. As opposed to a persistently strengthening bias in the official guidance fix since November, the weaker-than-expected fixing discouraged market participants from testing new highs in the yuan, said a trader at a Chinese bank. As of 0349 GMT, the onshore yuan was 0.05% lower at 7.1903 per dollar, while its offshore counterpart was down about 0.09% in Asian trade to 7.1840. Seasonal demand also weighed on the yuan, as many overseas-listed Chinese companies usually have higher foreign exchange needs to make dividend payments to their overseas shareholders between May and August. Separately, the market largely shrugged off April industrial profit data, which picked up pace, giving policymakers cause for optimism that recent stimulus efforts are helping to keep the economy afloat despite trade tensions with the United States. Investors will look to May manufacturing activity data due on Saturday for more clues on the health of the economy.
Malay Mail
22-05-2025
- Business
- Malay Mail
The RM265b reason Malaysia's ringgit is about to outperform every Asean currency
KUALA LUMPUR, May 22 — The ringgit could post the strongest gains in Southeast Asia if exporters convert their foreign earnings into local currency, driven by the country's substantial foreign-currency deposits. Foreign deposits across Malaysia, Thailand, the Philippines and Indonesia have surged to US$62.2 billion (RM265 billion) as of March, approaching record levels set the previous month, Bloomberg reported. Malaysia accounts for nearly all of this growth, with its foreign deposit expansion outpacing regional peers significantly. The focus on foreign deposits has intensified as investors monitor potential currency conversions amid growing scepticism toward the US dollar due to policy and economic concerns. Taiwan's exporters demonstrated this trend earlier this month when heavy foreign-exchange sales helped their local dollar achieve its largest single-day gain since 1988. 'Acceleration in broad dollar softness may risk triggering exporters rushing to sell their dollar holdings and that cycle, if it happens, it may result in excessive local currency strength,' said Christopher Wong, a senior foreign-exchange strategist at Oversea-Chinese Banking Corp. Major Southeast Asian currencies have already rallied to yearly highs as the dollar weakened and US-China trade tensions temporarily eased. While excessive currency appreciation might concern local authorities, moderate gains could enable further interest-rate cuts by reducing depreciation pressure. The Malaysian ringgit has emerged as the second-biggest gainer among emerging market currencies in Southeast Asia this year, rising 5 per cent. Malaysian policymakers earlier urged exporters to convert earnings into ringgit more promptly to support the local currency. Malaysia's foreign deposits reached 10.6 per cent of total deposits by March, standing 1.6 standard deviations above the five-year average. Goldman Sachs strategists recommend that Asian exporters continue converting dollars to local currencies after years of accumulating dollar deposits.
Free Malaysia Today
22-05-2025
- Business
- Free Malaysia Today
Ringgit may gain most in SE Asia on exporter conversion
The ringgit became Southeast Asia's second-largest gainer this year as investors focused on firms converting foreign deposits into local currency. (Reuters pic) KUALA LUMPUR : Malaysia's ringgit stands to gain the most among its Southeast Asian peers if the nation's exporters convert their overseas earnings to the local currency, thanks to the nation's outsized foreign-currency deposits. Such deposits in Malaysia, Thailand, the Philippines and Indonesia combined have jumped to US$62.2 billion as of March, close to a record high set in the previous month, according to Bloomberg calculations. Malaysia made up almost all of it and the nation's foreign deposit growth also outpaced most of its peers. Foreign deposits in the region are coming under greater focus as investors watch for signs of companies converting them to local currencies, as market perception of the dollar sours due to concern over US policymaking and its economic outlook. Heavy foreign-exchange sales by Taiwanese exporters earlier this month helped the local dollar post its biggest single-day jump since 1988. 'Acceleration in broad dollar softness may risk triggering exporters rushing to sell their dollar holdings and that cycle, if it happens, it may result in excessive local currency strength,' said Christopher Wong, a senior foreign-exchange strategist at Oversea-Chinese Banking Corp. Most major Southeast Asian currencies have already rallied to their highest levels this year amid the dollar's decline and as a temporary trade truce between the US and China improved market sentiment. While excessive currency gains may invite the ire of local authorities, some appreciation may be welcomed as it would open the door for further interest-rate cuts by reducing the depreciation pressure on local currencies. The ringgit was the second-biggest gainer among emerging market currencies in Southeast Asia so far this year with a rise of 5%. Earlier this year, the nation's policymakers urged exporters to convert their earnings into ringgit in a more timely manner to help buoy the local currency. Malaysia's foreign deposits grew to 10.6% of the total as of March, according to latest data from the nation's central bank. That's 1.6 standard deviations higher than the five-year average. The same gauge for Thailand, the Philippines and Indonesia stood at 2, 1.3 and 1.1, respectively. Southeast Asian investors loaded up on dollar-denominated investments during a period of rising returns on US assets. The Federal Reserve's aggressive rate hike cycle in 2022 and 2023 took the upper bound of the Fed fund rate to 5.50% — higher than even the policy rates in Thailand and Malaysia. Currency returns provided another incentive, with the Bloomberg Dollar Spot Index rising 10.5% in the five years to the end of 2024. While investors have pared extreme bearishness over dollar assets seen in April — when President Donald Trump announced reciprocal tariffs and spurred doubts over the Fed's independence — the US fiscal stance is giving investors another reason to shun the greenback. 'Asian exporters should continue to convert their dollars into local currencies, after several years of building up dollar deposits,' Goldman Sachs Group Inc strategist Danny Suwanapruti wrote in a note last week. The bank favours the ringgit, Singaporean dollar, won and the Taiwanese dollar if trade deals are reached, the yuan rallies to 7 per dollar and if exporters continue to sell the greenback.
Straits Times
22-05-2025
- Business
- Straits Times
Ringgit may gain most in South-east Asia on exporter conversion
The Malaysian ringgit was the second-biggest gainer among emerging market currencies in South-east Asia so far this year with a rise of 5 per cent. PHOTO: ST FILE SINGAPORE – Malaysia's ringgit stands to gain the most among its South-east Asian peers if the nation's exporters convert their overseas earnings to the local currency, thanks to the nation's outsized foreign-currency deposits. Such deposits in Malaysia, Thailand, the Philippines and Indonesia combined have jumped to US$62.2 billion (S$80.53 billion) as of March, close to a record high set in the previous month, according to Bloomberg calculations. Malaysia made up almost all of it and the nation's foreign deposit growth also outpaced most of its peers. Foreign deposits in the region are coming under greater focus as investors watch for signs of companies converting them to local currencies, as market perception of the dollar sours due to concern over US policymaking and its economic outlook. Heavy foreign-exchange sales by Taiwanese exporters earlier this month helped the local dollar post its biggest single-day jump since 1988. 'Acceleration in broad dollar softness may risk triggering exporters rushing to sell their dollar holdings and that cycle, if it happens, it may result in excessive local currency strength,' said Mr Christopher Wong, a senior foreign-exchange strategist at Oversea-Chinese Banking Corp. Most major South-east Asian currencies have already rallied to their highest levels this year amid the dollar's decline and as a temporary trade truce between the US and China improved market sentiment. While excessive currency gains may invite the ire of local authorities, some appreciation may be welcomed as it would open the door for further interest-rate cuts by reducing the depreciation pressure on local currencies. The Malaysian ringgit was the second-biggest gainer among emerging market currencies in South-east Asia so far this year with a rise of 5 per cent. Earlier this year, the nation's policymakers urged exporters to convert their earnings into ringgit in a more timely manner to help buoy the local currency. Malaysia's foreign deposits grew to 10.6 per cent of the total as of March, according to latest data from the nation's central bank. That is 1.6 standard deviations higher than the five-year average. The same gauge for Thailand, the Philippines and Indonesia stood at 2, 1.3 and 1.1, respectively. South-east Asian investors loaded up on dollar-denominated investments during a period of rising returns on US assets. The US Federal Reserve's aggressive rate hike cycle in 2022 and 2023 took the upper bound of the Fed fund rate to 5.50 per cent – higher than even the policy rates in Thailand and Malaysia. Currency returns provided another incentive, with the Bloomberg Dollar Spot Index rising 10.5 per cent in the five years to the end of 2024. While investors have pared extreme bearishness over dollar assets seen in April – when US President Donald Trump announced reciprocal tariffs and spurred doubts over the Fed's independence – the US fiscal stance is giving investors another reason to shun the greenback. 'Asian exporters should continue to convert their dollars into local currencies, after several years of building up dollar deposits,' Goldman Sachs Group strategist Danny Suwanapruti wrote in a note last week. The bank favors the ringgit, Singaporean dollar, won and the Taiwanese dollar if trade deals are reached, the yuan rallies to 7 per dollar and if exporters continue to sell the greenback. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
