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Renminbi Series: China’s forex reserve swells to highest level in 2017

China, which has the biggest foreign exchange reserve in the world, registered a fourth consecutive monthly increase in the reserve according to data released by People’s Bank of China (PBoC) today. China’s foreign exchange reserve swelled by $24 billion in the month of May pushing the total reserve to $3.0536 trillion, which is the highest for the current year. The value of reserves to the end of May is likely to have been helped along by an easing in capital outflows and a slip in the US dollar over the period.

After we changed our bearish outlook in the Yuan last month to bullish, Chinese currency rose faster than we anticipated and reached our forecasted target 6.78 per dollar. We subsequently extended our target 6.69 per dollar. While it is yet to get reached, the Chinese currency has touched as high as 6.72 per dollar in the offshore Hong Kong market. The United States approach to China has been more accommodating than we and many in the financial markets had anticipated as President Trump plans to use trade deficits as a leverage to make China help in reducing the nuclear and ballistic missile threats posed by its neighbor North Korea.

We remain bullish on the Chinese currency also due to the fact that recent weakness in the US economic dockets and slower inflation have helped pacify the concern that faster rate hikes from the US Federal Reserve could prove detrimental for the Chinese currency. The yuan is currently trading at 6.773 per dollar.

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2017-11-23 16:31:32
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2017-11-23 16:30:58
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November 23 21:00 UTC Released

KRConsumer Sentiment Ind*

Actual

112.3 Bln USD

Forecast

Previous

112.3 Bln USD

November 23 19:00 UTC Released

AREconomic Activity YY*

Actual

955 %

Forecast

-800 %

Previous

1755 %

November 23 23:50 UTC 103103m

JPForeign Bond Investment

Actual

Forecast

Previous

-105 Bln JPY

November 23 23:50 UTC 103103m

JPForeign Invest JP Stock

Actual

Forecast

Previous

182.4 Bln JPY

November 24 00:30 UTC 143143m

JPNikkei Mfg PMI Flash

Actual

Forecast

Previous

52.8 bln $

November 24 09:00 UTC 653653m

DEIfo Business Climate*

Actual

Forecast

116.6 %

Previous

116.7 %

November 24 09:00 UTC 653653m

DEIfo Current Conditions*

Actual

Forecast

125 %

Previous

124.8 %

November 24 09:00 UTC 653653m

DEIfo Expectations*

Actual

Forecast

108.9 %

Previous

109.1 %

November 24 09:00 UTC 653653m

ITIndustrial Orders MM SA

Actual

Forecast

Previous

8.7 %

November 24 09:00 UTC 653653m

ITIndustrial Orders YY NSA

Actual

Forecast

Previous

12.2 %

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