China's yuan hits 5-week low as South Korea export data darkens outlook

By Georgina Lee HONG KONG, Feb 13 (Reuters) - China's yuan sank to its weakest in five weeks during early trading on Monday, as data from South Korea compounded concerns about Asia's export growth and investors stayed cautious ahead of key U.S. inflation data. While South Korea's exports for the first 10 days of February rose 11.9% from a year earlier, the customs data showed that average exports per working day fell 14.5% after adjustment for the different timing of Lunar New Year holiday. "As one of China's trading partners, South Korea's disappointing export data reinforced the overall deterioration in Asia's export orders," said Kiyong Seong, lead Asia macro strategist at Societe Generale. "Such concern has weighed on the yuan, alongside other Asian currencies such as Korean won."

The spot yuan opened at 6.8349 per dollar and was changing hands at 6.8293 at midday, 135 pips weaker than the previous late session close and 0.21% away from the midpoint.

The People's Bank of China set the midpoint rate at 6.8151 per U.S. dollar prior to the market open, weaker than the previous fix at 6.7884.

The spot rate is currently allowed to trade with a range 2% above or below the official fixing on any given day. The global dollar index rose to 103.734 from the previous close of 103.63.
Investors are focused on U.S. consumer price index (CPI) data due on Tuesday, as stronger than expected inflation could keep U.S. interest rates higher for longer.

China reported last Friday that new bank loans jumped more than expected to a record 4.9 trillion yuan ($720.21 billion) in January. A strong rebound in credit demand will be essential this year after a crisis in the property sector dragged China's growth down to 3% in 2022, one of its performances in nearly half a century. But a breakdown of the new loan data revealed that retail loan appetite remained weak.

"Despite banks' efforts to boost consumer credit in January, consumer loan growth remained slow. Mortgage loans remained weak amid the housing slump which weighed on consumer credit," said senior economist Tommy Wu and FX analyst Brandon Yu at Commerzbank in a research note.

The offshore yuan was trading 0.14% weaker than the onshore spot at 6.8389 per dollar.

The one-year forward value for the offshore yuan traded at 6.6717 per dollar, indicating a roughly 2.51% appreciation within 12 months. The yuan market at 3:29AM GMT:

ONSHORE SPOT: Item Current Previous Change PBOC midpoint -0.39% 6.8151 6.7884

Spot yuan -0.20% 6.8293 6.8158

Divergence from
midpoint*

0.21%
Spot change YTD

1.04% Spot change since 2005
revaluation 21.19% OFFSHORE CNH MARKET
Instrument Current Difference from onshore Offshore spot yuan
* -0.14% 6.8389

Offshore
non-deliverable 2.01% forwards 6.6805
**

*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint, since non-deliverable forwards are settled against the midpoint. .
(Reporting by Georgina Lee; Editing by Simon Cameron-Moore)

Reuters

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