Skip to content USDCNH Analysis – 2-October-2024
Amidst the festivities of China’s National Day, the offshore yuan showed signs of recovery, climbing above 7.02 against the dollar following three days of declines. This uptick offers a glimmer of hope in an otherwise tense economic atmosphere.
Manufacturing Shows Resilience
Recent official statistics released just before the holiday break indicated a slight uptick in manufacturing performance in September 2024. This progress comes after a notable dip in August, marking the lowest point in six months, yet surprisingly surpassing analyst projections.
Challenges in the Services Sector
In contrast to the manufacturing sector, the services industry didn’t perform as well. It fell short of expectations, recording its lowest performance since January 2023. This downturn underscores the sector’s ongoing struggles.
Economic Measures and Interventions
Adding to the complexity, a privately conducted study highlighted the most severe drop in manufacturing since early 2023. Similarly, service sector performance was below anticipated levels, reaching a nadir not seen since September of the previous year.
In response, the People’s Bank of China has introduced a significant policy adjustment. Starting November 1, homeowners can renegotiate the terms of their mortgages.
This move is a key element of Beijing’s strategy to invigorate the economy, aligning with the nation’s most substantial stimulus effort since the pandemic.
Conclusion: Navigating Economic Waters
Despite some positive signs in manufacturing, the overall economic landscape remains fraught with challenges, particularly in the services sector.
Beijing’s proactive measures, including the adjustment of mortgage terms, reflect a concerted effort to stabilize and stimulate the economy amidst fluctuating conditions. This approach aims to address immediate concerns and lay a foundation for sustained recovery.
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