Chinese exporters see respite as Beijing curbs yuan rise amid looming record surplus

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The central bank’s move to slow the yuan’s offers a breather to exporters, they say

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Emma Main Shanghai

The People’s Bank of China’s (PBOC) intervention to raise the foreign exchange reserve requirement ratio amid the yuan’s sustained rally has delivered a reprieve for China’s broader export sector, as the measure is expected to partly ease appreciation momentum driven by the country’s enormous trade surplus, analysts say.

China’s goods trade surplus mounted to a record US$938.1 billion in the January-September period, rising from US$726.2 billion in the same period a year prior. With the full year trade surplus widely expected to be higher than last year’s US$1.2 trillion record, a larger surplus brings higher foreign exchange settlement volumes.

A feedback loop – strengthening appreciation expectations, concentrated foreign exchange settlement by exporters and accelerated renminbi gains – was taking hold prior to the new PBOC policy, according to a Tuesday research note by Citic Securities in Beijing.

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