Asian currencies fell on Monday during the first day of 2016 trading. China’s factory activity had contracted its export activities. Combined with a rise in oil prices by 3 per cent due to Middle East tensions.
Japan’s Nikkei had fallen by 2.6 per cent, its lowest in 2 1/2 months. Meanwhile, China shares had fallen by four per cent.
The Australian Dollar had fallen by 0.8 per cent to 6.6030 per dollar, its lowest in five years last week.
According to analysts, China wants its Yuan’s value to go lower. However, other speculate it could also be due to erratic trading during the start of the year.
Meanwhile, Western currencies had little change. The Euro changed little from the end of the previous year. The US Federal Reserve still will not raise its interest rates this year despite the first signs of activity in a decade last month.
However, the US’ stock futures had dipped by 0.4 per cent .
According to BlackRock CIO Ross Koestrich to its Asian clients:
“While fiscal support has helped slow the rate of economic deceleration, China needs to balance the need for stimulus with the reality of the unsustainable buildup in debt. This will continue to limit the scope for stimulus, and suggests further economic deceleration in 2016.”