Asian Shares Mixed as Focus Remains on Yuan Midpoint

“The decision by (Chinese President) Xi Jinping to allow the (Yuan) to dip a little bit is the Chinese equivalent of a tweet,” Daniel Russel, former assistant secretary of state for East Asian and Pacific Affairs said.
James Hyerczyk
Chinese Yuan

Asia Pacific shares are trading mixed on Wednesday as investors continue to digest the uncertainty over escalating tensions between the United States and China, and the fluctuations in the Chinese Yuan. In other news, the Reserve Bank of New Zealand surprised the markets by slashing its official cash rate by 50 basis points, to an all-time low of 1%.

At 06:15 GMT, Japan’s Nikkei 225 Index is trading 20520.93, down 64.38 or -0.31%. Hong Kong’s Hang Seng Index is at 25954.17, down 22.07 or -0.08% and South Korea’s KOSPI Index is trading 1914.00, down 3.50 or -0.18%.

China’s Shanghai Index is at 2781.94, up 4.38 or +0.16% and Australia’s S&P/ASX 200 Index is trading 6524.50, up 46.40 or 0.72%.

PBOC Sets Official Midpoint Reference

The People’s Bank of China (PBOC) set the official midpoint reference for the Yuan at 6.9996, two days after Washington label Beijing a currency manipulator.

A Reuters estimate had predicted that the PBOC would fix the Yuan at 6.9994 against the dollar on Wednesday. On Tuesday, the PBOC set the Yuan fixing at 6.9683, which was the weakest reference point since May 20, 2008, according to Reuters.

“The timing of the move beyond 7.00 is clearly not a coincidence and may have a political dimension,” S&P Global Ratings said in a report published Wednesday.

“While the timing may raise concerns that big currency policy changes are afoot, so far, we have not seen any evidence that the overall policy framework has changed,” economists at S&P noted.

The implications for macroeconomic policies will be limited “so long as China avoids destabilizing capital outflow,” S&P said.

Xi Jinping Sends Message to Trump

A guest on CNBC’s “Street Signs” on Wednesday had an interesting take on China allowing the Yuan to depreciate through the key level of 7 to the Dollar.

“The decision by (Chinese President) Xi Jinping to allow the (Yuan) to dip a little bit is the Chinese equivalent of a tweet,” Daniel Russel, former assistant secretary of state for East Asian and Pacific Affairs said.

“It’s a signal to the U.S., it’s a signal to Donald Trump. It says:  “Hey if you want to fight you’re gonna take a few punches,” Russel added. “China’s not gonna rollover, China’s a big country, a big economy and it politically simply won’t allow itself to be bullied.”

Reserve Bank of New Zealand Shocks Economists

The New Zealand Dollar plunged on Wednesday after the RBNZ surprisingly cut interest rates by half a percent – a move which no economist forecast.

The RBNZ’s official cash rate target is now 1 percent.

The Australian ASX/200 Index rallied sharply higher on the news because it likely means the Reserve Bank of Australia will follow suit, as it did with rate cuts earlier this year.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US