Welcome!

News Feed Item

FXPRIMUS Market Brief of the Week: The Depreciation of the RMB Reflects the People Bank of China's (PBOC) Policy Stance

SINGAPORE, SINGAPORE -- (Marketwired) -- 03/05/14 -- In FXPRIMUS' Market Brief of The Week for 3 March, the brokerage firm's Senior Economist, Jimmy Zhu, looks at how the devaluation of Yuan will affect the Chinese economy.

Economic Insights

The RMB has depreciated around 1.5% for the entire month of February. If devaluation of the Yuan continues, how will this affect the Chinese economy moving forward?

In January, we wrote one article for "Bloomberg Economics" that value of the Yuan plays a key role of the Chinese economy outlook in 2014. Under that article, we stated that the economy may prefer a weaker exchange rate in near term when most of the growth engines were slowly climbing except for exports and thanks to the sound recovery of its major trading partners.

One of the main reasons for the PBOC to engineer lower exchange rate is to decelerate shadow finance activities and keep its financial market stable for a longer period of time.


1.  Lots of hot money is purely betting the RMB's one way move. Once this
    perception can be eliminated, the amount of inflow will be trimmed down
    substantially.

2.  Lower rates also push those Wealth Management Products' (WMP) yield
    lower. Number of Alibaba's Yuebao accounts has reached 81 million, much
    higher the numbers of the A share account holders at 67 million.

With the benchmark interest rate moving lower, the Yuebao's annual yield has dropped below 6% this week, aiming to reduce its popularity.

Could any central bank change its monetary policy regime this month, and what kind of opportunities investors can take advantage of?

It will definitely be the Reserve Bank of New Zealand (RBNZ). We expect the RBNZ to increase the Official Cash Rate (OCR) by 25 bps to 2.75% next week. New Zealand's economic expansion has 'considerable momentum'. Prices for New Zealand's export commodities remain very high, especially for dairy products. Consumer and business confidence are strong and the rapid rise in net inward migration over the past year has added to consumption and housing demand. Construction activity is being lifted by the Canterbury rebuild and by work in Auckland to address the housing shortage. Continued fiscal consolidation will partly offset the strength in demand. Gross Domestic Product (GDP) grew by 3.5% in the year to September, and growth is expected to continue around this rate over the coming year.

While agricultural export prices are expected to come off their peak levels, overall export demand should benefit from improving growth in the global economy. However, improvements in the major economies have required exceptional monetary accommodation and there remains uncertainty about the timing of withdrawal of this stimulus and its effects, especially on emerging market economies.

Annual Consumer Price Index (CPI) inflation was 1.6% in 2013, and forward-looking measures of firms' pricing intentions have been rising. Construction costs are increasing and risk feeding through to broader costs in the economy. At the same time, there appears to have been some moderation in the housing market in recent months. The high exchange rate continues to dampen inflation in the traded goods sector, but the Bank does not believe the current level of the exchange rate is sustainable in the long run.

While headline inflation has been moderate, inflationary pressures are expected to increase over the next two years. In this environment, there is a need to return interest rates to more-normal levels. The RBNZ expects to start this adjustment soon.

Top News This Week

U.S. Non-farm Payrolls

I expect figures to come in at 150K

European Central Bank (ECB) benchmark lending rate decision

I expect figures to come in at 0.25%

ABOUT FXPRIMUS

FXPRIMUS offers retail traders a level of trade execution, service quality and fund safety that are normally reserved only for the largest investors. Serving traders in 205 countries across 6 continents FXPRIMUS combines an unmatched level of fund safety with regular independent audits of company financials and Straight Through Processing, top notch execution with tight spreads, prompt and responsive customer support, ISO 27001 certification in Information Security, ISO 9001:2008 certification in Quality Management and an industry-leading trader toolset that includes free access to powerful trader tools. FXPRIMUS truly is The Safest Place To Trade.

Add to Digg Bookmark with del.icio.us Add to Newsvine

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Extracting business value from Internet of Things (IoT) data doesn’t happen overnight. There are several requirements that must be satisfied, including IoT device enablement, data analysis, real-time detection of complex events and automated orchestration of actions. Unfortunately, too many companies fall short in achieving their business goals by implementing incomplete solutions or not focusing on tangible use cases. In his general session at @ThingsExpo, Dave McCarthy, Director of Products...
Successful digital transformation requires new organizational competencies and capabilities. Research tells us that the biggest impediment to successful transformation is human; consequently, the biggest enabler is a properly skilled and empowered workforce. In the digital age, new individual and collective competencies are required. In his session at 19th Cloud Expo, Bob Newhouse, CEO and founder of Agilitiv, drew together recent research and lessons learned from emerging and established compa...
Without a clear strategy for cost control and an architecture designed with cloud services in mind, costs and operational performance can quickly get out of control. To avoid multiple architectural redesigns requires extensive thought and planning. Boundary (now part of BMC) launched a new public-facing multi-tenant high resolution monitoring service on Amazon AWS two years ago, facing challenges and learning best practices in the early days of the new service. In his session at 19th Cloud Exp...
"Venafi has a platform that allows you to manage, centralize and automate the complete life cycle of keys and certificates within the organization," explained Gina Osmond, Sr. Field Marketing Manager at Venafi, in this SYS-CON.tv interview at DevOps at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Effectively SMBs and government programs must address compounded regulatory compliance requirements. The most recent are Controlled Unclassified Information and the EU's GDPR have Board Level implications. Managing sensitive data protection will likely result in acquisition criteria, demonstration requests and new requirements. Developers, as part of the pre-planning process and the associated supply chain, could benefit from updating their code libraries and design by incorporating changes. In...
"Coalfire is a cyber-risk, security and compliance assessment and advisory services firm. We do a lot of work with the cloud service provider community," explained Ryan McGowan, Vice President, Sales (West) at Coalfire Systems, Inc., in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Regulatory requirements exist to promote the controlled sharing of information, while protecting the privacy and/or security of the information. Regulations for each type of information have their own set of rules, policies, and guidelines. Cloud Service Providers (CSP) are faced with increasing demand for services at decreasing prices. Demonstrating and maintaining compliance with regulations is a nontrivial task and doing so against numerous sets of regulatory requirements can be daunting task...
CloudJumper, a Workspace as a Service (WaaS) platform innovator for agile business IT, has been recognized with the Customer Value Leadership Award for its nWorkSpace platform by Frost & Sullivan. The company was also featured in a new report(1) by the industry research firm titled, “Desktop-as-a-Service Buyer’s Guide, 2016,” which provides a comprehensive comparison of DaaS providers, including CloudJumper, Amazon, VMware, and Microsoft.
Businesses and business units of all sizes can benefit from cloud computing, but many don't want the cost, performance and security concerns of public cloud nor the complexity of building their own private clouds. Today, some cloud vendors are using artificial intelligence (AI) to simplify cloud deployment and management. In his session at 20th Cloud Expo, Ajay Gulati, Co-founder and CEO of ZeroStack, will discuss how AI can simplify cloud operations. He will cover the following topics: why clou...
Fact: storage performance problems have only gotten more complicated, as applications not only have become largely virtualized, but also have moved to cloud-based infrastructures. Storage performance in virtualized environments isn’t just about IOPS anymore. Instead, you need to guarantee performance for individual VMs, helping applications maintain performance as the number of VMs continues to go up in real time. In his session at Cloud Expo, Dhiraj Sehgal, Product and Marketing at Tintri, sha...
The WebRTC Summit New York, to be held June 6-8, 2017, at the Javits Center in New York City, NY, announces that its Call for Papers is now open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 20th International Cloud Expo and @ThingsExpo. WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web ...
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life sett...
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
More and more companies are looking to microservices as an architectural pattern for breaking apart applications into more manageable pieces so that agile teams can deliver new features quicker and more effectively. What this pattern has done more than anything to date is spark organizational transformations, setting the foundation for future application development. In practice, however, there are a number of considerations to make that go beyond simply “build, ship, and run,” which changes how...
WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web communications world. The 6th WebRTC Summit continues our tradition of delivering the latest and greatest presentations within the world of WebRTC. Topics include voice calling, video chat, P2P file sharing, and use cases that have already leveraged the power and convenience of WebRTC.