China’s favorable trade data is lifting sentiments in Asian forex markets. A number of Asian currencies or their proxies have been seen rising against the USD or at least holding steady.
The New Zealand dollar (NZD) edged up against the USD on Wednesday. The NZD/USD pair touched a day’s high of 0.6590 in the late afternoon Asian trade, reaching the highest exchange point for the currency pair since January 8. The lower range of Wednesday’s trading of the pair during the Asian late trade was 0.6530.NZD/USD consolidated at 0.6554, indicating a 0.25% gain.
The Chinese Yuan also successfully held the line against USD on Wednesday. In mid-afternoon trading, the yuan retreated to 6.5764 to USD, slightly weaker than 6.5756 in the previous close.
Central Bank halts Yuan’s free fall
The free fall of China’s currency was halted following the fixed rate setting by the People’s Bank of China (PBOC). The central bank fixed the daily mid-point exchange rate for the yuan at 6.5630 USD. The market is allowed to swing 2% above or below the set fixed daily rate according to PBOC policy.
China’s yuan and a host of Asian currencies benefited from the surprisingly strong Chinese trade data. The data showed that the economic situation in China might not be as gloomy as it may have been made to appear.
Favorable Chinese data metrics
In December, China’s trade surplus rose to $60.09 billion, surpassing $54.10 billion in the previous month and also emerging better than what analysts predicted. Analysts were expecting China’s December trade surplus to contract to $53 billion.
China’s imports also held up strongly against expectations. The 7.6% decline in imports in December was better than the 11.5% fall that analysts predicted for the month. Additionally, the 1.4% drop in China’s exports in December surpassed analysts who were predicting an 8% slide in exports.
The strong trade metrics lifted sentiments not only in the yuan trade but also several of the yuan’s proxieslike the NZD.
However, things didn’t work out well for the Japanese yen. The yen retreated though the Nikkei seem to be the beneficiary, as Japanese stocks are up nearly 3% today.