China exports remain sluggish amid mounting pressure on yuan

[BEIJING] China's exports snapped a six-month streak of gains in local-currency terms, adding to pressure to the yuan, which is near a six-year low.

Overseas shipments declined 5.6 per cent in yuan terms in September from a year earlier, the customs administration said Thursday. Imports rose 2.2 per cent to leave a trade surplus of 278.4 billion yuan (S$57.38 billion).

Lacklustre trade data may increase pressure on the yuan at the same time new property curbs challenge the resilience of the nation's economic recovery. Third-quarter growth probably held up at 6.7 per cent for a third straight quarter, according to a Bloomberg survey of economists before the official report due Oct 19.

For China's central bank, "while the major battle in 2016 is against capital outflows, the one for next year has to be the fight against the depreciation expectations," Larry Hu, the head of China economics at Macquarie Securities Ltd in Hong Kong, wrote in a report ahead of the data release.

The yuan has dropped 3.4 per cent against the US dollar this year, the biggest decline in Asia, and weakened 6.2 per cent against a 13-currency trade-weighted index. The People's Bank of China on Thursday weakened the daily reference rate for the seventh day in a row, the longest weakening run since January.

BLOOMBERG