SHANGHAI, Aug. 12 (SMM) – The PBOC lowered RMB central parity by nearly 2% yesterday, growing risk aversion and weighing down global stocks, crude oil and commodity markets. Gold and debt, however, were boosted. The Fed will likely put off interest rate hike plan against sluggish Chinese economy.
The RMB:USD depreciated 1.8% Tuesday, posting the biggest one-day drop and hitting a three-year low. This suggests China will make all its endeavor to meet the 7% growth target and China’s economy is extremely sluggish. Consequently, currencies in emerging markets in Asia dropped to a low over the past few years. Singapore dollar and Taiwan dollar both hit a five-year low.
Economic indicators from the US were mixed. Wholesale inventories in June were 0.9%, and wholesales were 0.1%. NFIB Small Business Optimism Index in July was 95.4. US Q2 non-farm productivity was 1.3%, falling short of market expectations. The US dollar thus hovered in a wide range.
Global stocks markets mostly dropped; precious metals prices climbed. London gold price closed the day up 0.33%. Crude oil price plunged 4.2%, dipping to a six-year low. LME base metals prices tumbled across the board.