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Stop sales of yuan against Re: Goldman

Stop sales of yuan against Re: Goldman
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First Published: Thu, Feb 21 2008. 10 56 PM IST
Updated: Thu, Feb 21 2008. 10 56 PM IST
New York: Goldman Sachs Group Inc. strategists exited a bet on Wednesday that the yuan would decline against the rupee, after reports signalled economic strength in China.
The analysts advised selling the yuan against the rupee on 6 February. Snowstorms ruined crops and disrupted power supplies in southern and central China since 10 January. Goldman had expected a slowing US economy to crimp demand for Chinese goods as the country recovered from the storms. “Recent data out of China have confronted our assumption of weaker activity,” Goldman strategists Themos Fiotakis, Thomas Stolper and Jens Nordvig wrote in a note to clients on Wednesday.
The yuan fell 0.6% to Rs5.593 in Shanghai on Thursday, after gaining 0.8% on Wednesday, its biggest advance since August. It has climbed 3.7% against India’s currency this year.
China’s consumer prices rose 7.1% from a year ago in January, the statistics bureau said this week, adding to evidence that the world’s fastest growing economy is at risk of overheating. The nation’s trade surplus rose more than forecast in January and money supply grew at the quickest pace in 20 months.
The rupee had the biggest gain in four months on speculation that exporters converted their foreign exchange earnings into the local currency.
Companies, including Tata Consultancy Services Ltd and Infosys Technologies Ltd, India’s top software exporters, may increase their local currency profits by exchanging their overseas earnings into rupees after it fell to the lowest in five months on Wednesday. Exports account for about a fourth of India’s $906 billion (Rs36.33 trillion) economy. “There is a premium now on the dollar and exporters are capitalizing on it,” said V. Kumar, chief currency trader at state-owned State Bank of Travancore in Mumbai. The rupee rose 0.7% to 39.93 per dollar on Thursday.
Anoop Agrawal contributed to this story.
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First Published: Thu, Feb 21 2008. 10 56 PM IST
More Topics: Yuan | Re | Goldman | Money Matters | Currency |