Chinese currency weakens 260 pips to 6.7246 against dollar in early trades – Business Standard

The central parity rate of the Chinese currency renminbi, weakened 260 pips to 6.7246 against the US dollar Wednesday, media reported citing the foreign exchange trade system.

In China’s spot foreign exchange market, the is allowed to rise or fall by 2 per cent from the central parity rate each trading day, Xinhua News Agency reported.

The central parity rate of the against the US dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.

Earlier on Monday, the central parity rate of the Chinese currency weakened 208 pips to 6.7071 against the US dollar.

Reports say that China’s foreign exchange market saw a turnover of 15.95 trillion (about 2.38 trillion U.S. dollars) in May, down from 17.14 trillion yuan in April.

Amid uncertainty over the zero-COVID policy, foreign issuers have hit the brakes on offerings of China’s panda bonds for investing in Asia’s largest economy.

A Chinese renminbi-denominated bond sold in China but issued by a non-Chinese is known as a panda bond.

As per Nikkei Asia, the issuances of so-called panda bonds for January to June are down half from a year earlier to a six-year low of 7.9 billion yuan (USD 1.18 billion), data from Refinitiv shows.

Only two companies have issued panda bonds in the first half: finance subsidiaries of BMW and Mercedes-Benz Group, down from five issuers a year earlier.

Panda bond issuances hit a full-year record of 32.4 billion yuan in 2021, but this year’s coronavirus resurgence has given issuers pause, reported Nikkei Asia.

While Shanghai and other cities have emerged from the coronavirus lockdowns that disrupted daily life and business activity for two months, the government’s hard-line zero-COVID containment policy hangs like a cloud over the economic outlook.

“There is no knowing when lockdowns may occur going forward,” said Shinichi Seki, a senior economist at the Japan Research Institute.

Small banks in China are running into trouble as they are accused of crimes, bad loans and excessive risk, due to the failure of Xi Jinping’s zero Covid policy.

Last year, China Bohai Bank, a national joint-stock commercial bank, has been accused of secretly using a client’s USD 438 million in deposits as collateral.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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