Offshore Yuan Drops Most in a Month as China Exports Decline

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The yuan traded in Hong Kong fell the most in a month after China’s exports unexpectedly contracted, fueling concern policy makers will favor a weaker exchange rate.

Overseas sales declined the most in more than a year in March while imports dropped as well, leaving the trade surplus at the least in 13 months. The yuan has gained against 25 of 31 major currencies this year, data compiled by Bloomberg show.

“The trade data are a blow to market optimism that China’s economy is in recovery,” said Stella Lee, president of Success Wealth Management Ltd. in Hong Kong. “Concern that China will curb the yuan’s strength is also weighing on the currency.”

The offshore yuan dropped 0.16 percent, the most since March 13, to 6.2276 a dollar as of 4:45 p.m. in Hong Kong, according to data compiled by Bloomberg. In Shanghai, the currency declined 0.12 percent to close at 6.2167, China Foreign Exchange Trade System prices show. The People’s Bank of China cut its daily fixing by 0.04 percent to 6.1395. The gap between the onshore spot rate and the fixing was 1.26 percent, within the 2 percent limit.

China’s economy faces increasing downward pressure, Premier Li Keqiang was cited by China Central Television as saying at a seminar. The government may announce policies to stabilize growth this quarter, according to an April 11 commentary in the China Securities Journal.

Exports fell 15 percent from a year ago in March, according to official data released Monday, trailing a Bloomberg survey’s median estimate of 9 percent growth. The trade excess came in at $3.08 billion, missing the median forecast of $40.1 billion.

The yuan will account for 10 percent of world reserves by 2025 with Asian monetary authorities showing the most support, according to a survey of central banks carried out in March. The yuan will make up an estimated 2.9 percent of foreign-exchange stockpiles by the end of this year, based on the Central Banking Publications survey sponsored by HSBC Holdings Plc. It includes responses from 72 monetary authorities with $5.9 trillion in reserves.

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