Small Exchange: China’s net forex sales plummet, Oman commits to currency peg and India’s rupee expected to strengthen

Peter Terlato 19 September 2017

money large

This week's currency news rounded up.

China's forex sales hit two-year low

As the Chinese yuan's strength solidifies and regulatory action intensifies, capital outflows have slowed significantly, driving down China's net foreign exchange sales, according to the latest financial statements.

Reuters reports China's commercial banks' net forex sales in August, US$3.8 billion, were the lowest they've been since June 2015, 26 months earlier.

In comparison, net forex sales in July were US$15.5 billion, while net sales for the first eight months of the year reached US$113.2 billion, according to the State Administration of Foreign Exchange (SAFE).

A data release from the People's Bank of China (PBOC) late last week shows its net foreign exchange sales fell to US$125.2 million in August, registering the lowest value in 22 months.

Among other regulations, last week the PBOC brought China's foreign exchange risk reserve ratio to zero.

These forex capital controls likely helped the yuan to gain 6.7% against the US dollar this year.

Oman committed to US currency peg

Oman's central bank is determined to continue pegging the rial against the US dollar but plans to abandon the creation of a single Gulf Cooperation Council currency.

Gulf News reports the Central Bank of Oman's new executive president, Tahir Salim Al Amri, said, despite sunken oil prices, the country's foreign exchange market was not under pressure.

Al Amri also added that he would not be pursuing any measures to conceive a new regional currency project.

"We are committed to the dollar peg but not to the single GCC currency decided some years ago," he said.

Rupee anticipated to gain against US dollar

A new poll of India's financial market participants, conducted by The Economic Times, found the rupee is set to gain around 4% against the dollar by March 2018 on the back of foreign portfolio investments.

The poll's participants predict the positively performing currency is estimated to grow in strength, intensifying India's allure for foreign direct investment.

The rupee is targeted to reach 61 Indian rupees (INR) against the US dollar by March, while more than a quarter of respondents expect the emerging-market currency to be in the 58-62 range by the close of July.

Some commentators argued that an unforeseen hardening in US rates or shrinkage in the Fed balance sheet could lead to a safe-haven rush, setting back optimistic market expectations.

The current exchange rate is around INR64 to US$1.

Each week Small Exchange sums up currency news from around the globe and looks into how it impacts exchange rates and options.

Latest money transfers headlines

Picture: Shutterstock

Get more from finder

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.
Ask a question
Go to site