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People's Daily Online>>China Business

News Analysis: Declining yuan is normal market response

(Xinhua)

09:19, December 07, 2011

BEIJING, Dec. 6 (Xinhua) -- The steep decline of the Chinese yuan during the past five trading days is market's normal response to China's falling trade surplus, analysts said, and predicted the yuan will stay balanced in value over the long-run.

The yuan fell to the low end of its daily trading against the U.S. dollar for the fifth consecutive day. During Tuesday's session, its central parity rate against the dollar hit 6.3651, forming a sharp contrast with a persistent strengthening before last Wednesday.

A narrowing trade surplus spurred this round of weakening, said Qu Hongbin, chief economist with HSBC China.

Customs figures showed the trade surplus of the world's largest exporter dropped 36 percent in October year-on-year, taking up a much smaller share of the GDP over past years.

The impetus behind a stronger yuan has been paired off, Qu said.

According to Zhang Monan, a researcher with the State Information Center, too much worry about a weaker yuan is unnecessary, as a moderate flow of the yuan's value reflects the market's sense that the Chinese economy is heading for a more balanced structure.

The current account surplus accounted for 2.8 percent of GDP in the middle of this year, much lower than the 10 percent before the 2008 global financial crisis. It also stood below the 4 percent global averaged standard.


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