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Chinese Renminbi: April Report

By Smart Currency April 24th, 2014

24 April 2014

chinese spring

CNY (Chinese renminbi) Current Rate:
CNY10.48/£1; CNY6.24/US$1

Last month we saw the The People’s Bank of China (PBoC) double the USD-CNY currency trading band from ±1% to ±2%. This incremental move towards a free-floating yuan was, on the surface, an experiment in freeing up the currency. It resulted in a weakening yuan, with the currency more vulnerable to market forces.  This month saw the US caution China not to use the excuse of a more liberated yuan to manipulate its currency, with a weaker yuan potentially edging China ahead in terms of export competitiveness.

The Chinese economy grew by 7.4% in the first quarter of 2014, exceeding expectations but falling short of the 7.7% growth it achieved in the previous quarter. This, coupled with disappointing trade balance figures, increases worries over a slowing Chinese economy. China claims that it is the world’s largest exporter, but it is also a premier market for other countries. Given that it is also the largest export market for some nations, any deceleration in Chinese growth would indirectly affect the economies of export-reliant countries like Australia.

Some analysts are still persevering with the opinion that the recent depreciation of the yuan has been due to teething problems as China tests out a wider float, rather than a cunning strategy implemented to claim an advantage in the exports market. If this is the case, we expect to see rapidly improving fortunes for the yuan, even against a strengthening sterling buoyed by UK economic recovery.

GBP-CNY February

Rate forecasts for GBP/CNY:

Time Length Rate
1 month 10.2920
3 months 10.1145
6 months 9.9220


Forecasts accurate from 20 April 2014. Data taken from Reuters’ poll.

Data sourced from GBP/USD and USD/CNY cross.

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The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy or sell. All information in this report is obtained from sources believed to be reliable and we make no representation as to its completeness or accuracy.