The offshore Chinese yuan weakened against the US dollar in the middle of the trading week following key trade data. Global financial markets have been attempting to assess how the world’s second-largest economy will perform in the final few months of 2024.
According to the General Administration of Customs, China’s trade surplus declined to $84.65 billion in July, down from $99.05 billion in June. Economists had anticipated a trade surplus reading of $99 billion.
Exports slowed to 7% year-over-year last month, down from 8.6% in the previous month, and below the market estimate of 9.7%. Imports surged to an annualized rate of 7.2%% last month, up from the 2.3% drop in June and higher than the consensus forecast of 3.5%.
In the first seven months of the year, China has posted a record trade surplus of $518 billion. Additionally, exports jumped 4% to $2.07 trillion, and imports increased 2.8% to $1.49 trillion.
Meanwhile, the Caixin service purchasing managers’ index (PMI) rose to 52.1 in July, up from 51.2 in June. This came in above economists’ expectations of 51.4. Anything above 50 indicates expansion. The composite PMI weakened from 52.8 to 51.2.
Foreign exchange reserves rose to a slightly higher-than-expected $3.256 trillion last month, up from $3.222 trillion.
The next major report for the Chinese economy is the July consumer price index (CPI). The annual and monthly inflation rates are expected to rise to 0.3%. Producer prices are forecast to fall to 0.9% year-over-year.
After the Bank of Japan (BOJ) confirmed that it would not raise interest rates during market volatility, global financial markets rallied, including the leading Asian indexes. The Shanghai Composite Index edged up 0.09%, while the Hang Seng Index advanced 1.38%.
The USD/CNH currency pair rose 0.31% to 7.1813, from an opening of 7.1594, at 16:04 GMT on Wednesday. The EUR/CNH swelled 0.24% to 7.8452, from an opening of 7.8263.
