Limited room for RMB appreciation before year-end, UBS
SHANGHAI, Oct. 14 (Xinhua) – There is limited room for RMB appreciation before the end of this year despite of China's high trade surplus in September, and the USD/RMB exchange rate will hover around 6.2 by end-2014, according to the UBS' report released on Tuesday.
China generated 31 billion US dollars of foreign trade surplus in September, and the country's aggregate foreign trade surplus hit 128 billion US dollars in the third quarter, according to customs statistics.
The UBS holds that huge foreign trade surplus helped offset sluggish forex inflow of the capital account, hence underpinned the RMB exchange rate.
The US dollar's appreciation against key currencies led to the appreciation of RMB effective exchange rate.
However, the appreciation of RMB effective exchange rate will weaken the competitiveness of China's export, and China to some extent depend on exports to offset impact from real estate industry decline and prop up employment.
In addition, the main factor behind the surge of foreign trade surplus was contraction of imports triggered by the weak performance of the real estate market rather than increase of China's exports competitiveness, said the broker. (Edited by Hou Yujie, email@example.com)