Article by ForexTime
China’s consumer price index (CPI) rose 1.5 per cent year-on-year in November, ahead of economists’ expectations of 1.4 per cent, according to the National Bureau of Statistics. This shows there is some kind of stabilization in domestic demand. This is good for the economy going forward.
In October prices had risen 1.3 per cent. The fastest they have risen so far this year was 2 per cent in August.
Meanwhile, producer prices (PPI) deflated for a 45th consecutive month in November at a rate of 5.9 per cent, the same rate as every month since August, slightly less than the 6 per cent economists had been expecting.
The Australian dollar jumped higher in reaction to the higher CPI number since China is a major trading partner for Australia. But after rising to a high of US$0.7236, the aussie fell back down to $0.7210.
Other news from China today showed that the country’s central bank ( People’s Bank of China) has fixed the reference rate around which the renminbi (also known as the Yuan) trades to its weakest level since 2011.
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The PBoC sets the reference rate for the renminbi each day, and the so-called “onshore” rate, CNY, is allowed to trade 2 per cent either side of that mid-point.
On Wednesday this was fixed at Rmb6.4140, a 0.1 per cent weakening versus the US dollar.
On August 11, the Yuan weakened sharply after the PBoC carried out the biggest devaluation of the renminbi in two decades to boost its slowing economy. By August 27, the renminbi fix was set as weak as Rmb6.4085 to the dollar, but today’s PBoC setting has surpassed that.
Article by ForexTime
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