CHINESE
exports fell 8.3 per cent in July and imports dropped 8.1 per cent, according
to the data from the General Administration of Customs, Reuters
reported.
This news was
soon eclipsed by a sudden 1.9 per cent drop in value of the Chinese Yuan causing
widespread consternation in worldwide market.
It was the biggest
one-day change since 1993, reported London's Financial Times.
The fall, which pushed the currency's value from RMB6.1162 against the dollar
the day before to RMB6.2298, was also the largest since China transitioned from
a tight currency peg to a managed floating valuation in 2005.
The move
could help combat a fall in China's exports fueled in part by the currency's
relative strength, and marks a departure from policy in previous periods of
economic stress, during which Beijing refused to devalue despite upward
pressure from the yuan's informal peg to the dollar.
This was
preceded by the biggest export drop in four months and worse than expected,
reinforcing expectations that Beijing will be induced to apply more
quantitative easing (QE) stimulus if the devaluation fails to have the affect
desired.
Exports to
the European Union fell 12.3 per cent in July while those to the United States
dropped 1.3 per cent. Demand from Japan, another big trading partner, slid 13
per cent.
"A
recovery in external demand remains far off and economic growth will continue
to rely on domestic demand, which implies policies should continue to be
relaxed in the second half," wrote HSBC economist Qu Hongbin.
That compared
with forecasts for an eight per cent drop, after a 6.1 per cent decline in June,
though these falls also reflected weaker commodity prices.
Source :
HKSG.
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