2017许昌棚户改造范围:Yuan Loses Feel Of One-Way Bet

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The Chinese currency, once seen as the surest bet in global financial markets, is testing the confidence of investors as it tumbles, then jumps amid global market turmoil.
The belief that the yuan would rise led investors to pour billions of dollars into the currency and snap up so-called 'dim sum' bonds, which are denominated in the Chinese currency.
In recent weeks, the appreciation of the yuan has slowed, trading appears to have eased and investors are no longer rushing to buy the currency. Some of this change has been driven by a spike in market volatility that sent investors seeking the safe haven of the U.S. dollar, but analysts say investors also are looking more skeptically at the market and the currency itself.
'People are backing out of the yuan trade because it's become a riskier bet since the scramble for U.S. dollars intensified in late September,' said Tim Condon, Singapore-based chief Asia economist with ING Groep.
Still, most analysts expect the yuan market to continue to grow as China moves to build an international market for its currency.
Encouraged by China, a vibrant offshore yuan market has blossomed in Hong Kong. A booming business in dim sum bonds soon followed, with companies including Caterpillar and McDonald's issuing bonds denominated in yuan. Beijing still controls the currency and how yuan bought in Hong Kong can be brought back into China.
Knowing China was under pressure from the U.S. and concerned about rising inflation at home, investors bet that it would let the yuan rise steadily. The currency has risen 7.7% since June 2010, when China freed the yuan from its peg against the dollar, and is up 3.9% this year.
More recently, the market's expectation for yuan appreciation has declined on worries that China would slow the currency's rise to avoid hurting its exports, which already are being hit by a sluggish global economy. Until this week, the currency, also known as the renminbi, had barely risen against the U.S. dollar since mid-September. On Tuesday and Wednesday, it jumped, hitting 6.3520 versus the dollar in Hong Kong trading, just below the record.
Rhetoric from the Chinese government has confirmed expectations that the yuan's rise would stop. China's yuan exchange rate is within a 'basically reasonable level,' Chinese Commerce Minister Chen Deming said Friday at the summit of the Group of 20 industrial and developing nations.
Declining enthusiasm for the yuan has helped cut currency-trading volume in Hong Kong by a third under some estimates. While precise figures aren't available, traders at several firms reckon that daily turnover fell from $1.6 billion at its peak over the summer to $1 billion currently, though there has been an uptick in recent days.
The fall in trading volume isn't unique to the yuan. Trading in many assets that are considered risky, including developing-market currencies and stock markets everywhere, including in the U.S., has declined since the fall sell-off.
The turmoil was a reminder to investors that the yuan market is young and still relatively thinly traded. In some cases, investors in need of dollar funds were forced to sell out of yuan positions, and that selling roiled the market, traders said. 'The flaws in the market have been amply revealed over the past two months,' said Patrick Perret-Green, Singapore-based head of Asian currency and rates strategy at Citigroup.
Many investors who fled during the turmoil haven't returned. 'Everybody is still digesting the recent sell-off and trying to figure out what's next,' said Kimman Ngan, head of Hang Seng Bank's renminbi business strategy and planning department in Hong Kong.
Nowhere was the yuan's popularity more apparent than in accounts at Hong Kong banks. Yuan deposits in Hong Kong's banking system soared more than four times to 622.2 billion yuan as of September from a year earlier, according to the Hong Kong Monetary Authority, and now account for 10.4% of the territory's bank deposits.
But growth has slowed, and some analysts are expecting investors to cut their yuan holdings. Last week, the Hong Kong Monetary Authority said yuan deposits in Hong Kong increased 2.2% in September from a month earlier, down from the 6.4% month-over-month growth in August. Analysts at HSBC Holdings and other banks predict that October's data will show a sizable decline.
Still, the analysts and many economists say this is just a pause, and the market for the yuan will eventually begin growing again. They point to China's still-robust economic growth, moderate public-debt levels, high savings rate and big trade surplus.
Paul Mackel, head of Asian currency research at HSBC in Hong Kong, said he maintains his outlook for 'a slow and gradual' appreciation in the yuan, as he expects Beijing to demonstrate 'consistency' in its currency reforms.
LINGLING WEI / FIONA LAW