CHINA-MARKETS/GERMAN ECONOMY Yuan devaluation could have effect on German exports, says expert
Record ID:
144090
CHINA-MARKETS/GERMAN ECONOMY Yuan devaluation could have effect on German exports, says expert
- Title: CHINA-MARKETS/GERMAN ECONOMY Yuan devaluation could have effect on German exports, says expert
- Date: 13th August 2015
- Summary: BERLIN, GERMANY (AUGUST 13, 2015) (REUTERS) EXTERIOR OF OFFICE BUILDING FOR THE FEDERATION OF GERMAN WHOLESALE, FOREIGN TRADE AND SERVICES (BGA) SIGN FOR BGA SPOKESPERSON FOR THE FEDERATION OF GERMAN WHOLESALE, FOREIGN TRADE AND SERVICES (BGA), ANDRE SCHWARZ, WALKING PAST (SOUNDBITE) (German) SPOKESPERSON FOR THE FEDERATION OF GERMAN WHOLESALE, FOREIGN TRADE AND SERVICES (BGA), ANDRE SCHWARZ, SAYING: "We are somewhat worried about the developments in China. China is not necessarily famous for hasty reactions so we have to assume that there is a strategy behind it [devaluation of the yuan]. This shows that the problems in China are obviously bigger than we can see from afar." BGA MAGAZINES (SOUNDBITE) (German) SPOKESPERSON FOR THE FEDERATION OF GERMAN WHOLESALE, FOREIGN TRADE AND SERVICES (BGA), ANDRE SCHWARZ, SAYING: "It will certainly have an effect in Germany. We just don't know how long these developments will continue but if we assume that this is a strategy then we have to expect it to last longer. But firstly we will see an effect in the area of high-end consumer products, luxury products. That's where we would see some concerns directly for example within the German car market, for the German carmakers."
- Embargoed: 28th August 2015 13:00
- Keywords:
- Topics: General
- Reuters ID: LVA8IKRHHCHXCWAX3WCLJXXS9RZX
- Aspect Ratio: 16:9
- Story Text: China's decision to devalue the yuan could soon start to have a negative effect on the German economy, one trade expert told Reuters TV on Thursday (August 13).
China's yuan slid for a third straight day on Thursday but the central bank said there was no reason for the currency to fall any further given the country's strong economic fundamentals.
The People's Bank of China (PBOC) said the strong economic environment, sustained trade surplus, sound fiscal position and deep foreign exchange reserves provided "strong support" to the exchange rate.
But some U.S. politicians have accused Beijing of unfairly supporting its exporters.
With fears of a potential "currency war" erupting, financial markets have been roiled by the news this week and other Asian currencies have also been dragged into multi-year lows as a result.
China's surprise devaluation made foreign goods more expensive for its consumers and corporate customers.
And as China is the second-biggest buyer of EU goods after the United States, accounting for 14 percent of exports from the trade bloc last year, traders in Europe have been left nervous about the future.
"We are somewhat worried about the developments in China. China is not necessarily famous for hasty reactions so we have to assume that there is a strategy behind it [devaluation of the yuan]. This shows that the problems in China are obviously bigger than we can see from afar," spokesperson for the Federation of German Wholesale, Foreign Trade and Services (BGA), Andre Schwarz, said.
Tuesday's (August 11) initial yuan devaluation followed a run of weak economic data and resulted in the biggest one-day fall since 1994, raising market suspicions that China was embarking on a longer-term depreciation of its exchange rate that would make Chinese exports cheaper.
Weighed down by weak exports, sluggish domestic demand and a cooling property market, growth in the world's second-largest economy is expected to slow from 7.4 percent in 2014 to 7 percent this year, its slowest pace in a quarter of a century.
Sectors with the highest exposure are basic resources, personal and household goods, technology, chemicals and autos and Schwarz said that any further developments in China could soon have a knock-on effect in Germany.
"We just don't know how long these developments will continue but if we assume that this is a strategy then we have to expect it to last longer. But firstly we will see an effect in the area of high-end consumer products, luxury products. That's where we would see some concerns directly for example within the German car market, for the German carmakers," he said.
The exporter-heavy German blue-chip DAX fell 2.7 percent on Tuesday, with automakers Daimler, BMW and Volkswagen leading the way as China's car industry association reported the biggest monthly drop in vehicle sales in 2-1/2 years, even before any devaluation impact. - Copyright Holder: REUTERS
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