China’s yuan strengthens 0.7 percent at open after holiday

The Dow Jones industrial average was down 1.43 percent last week, while the United Kingdom’s FTSE 100 dropped 2.4 percent and Germany’s DAX declined by 3.43 percent.

The comments come after China reported economic growth of 6.9 percent for 2015, its weakest in 25 years, while depreciation pressure on the yuan adds to the case for the central bank to take more economic stimulus measures over the near-term.

During January’s market turmoil in China, some $113bn was sent out of the country in the first month of the year alone, according to estimates from the Institute for International Finance.

Surging capital outflows from China have become a source of growing global concern and have left Beijing scrambling to support the currency.

“Of these, we consider China the biggest medium-term risk, but the least immediate issue”, wrote Rajadhyaksha.

China’s exports tumbled 6.6 per cent year-on-year to 1.14 trillion yuan (around US$174 billion) in January, as the struggling manufacturing sector remained a drag on the world’s second-largest economy.

Chinese shares bucked the uptrend, following their week-long closure for the Lunar New Year holiday during which global stock markets logged steep losses.

Retail figures from the United States out on Friday had also been relatively upbeat and helped calm market jitters a little.

Early Monday, US crude had eased 35 cents to $29.09 a barrel, while Brent crude dipped 45 cents to $32.91.

The local unit, along with a range of currencies, has firmed in recent weeks as creeping doubts about the pace of US Federal Reserve interest rate increases has undermined the greenback. The dollar was up a touch at 113.64 yen, having pulled away from a 15-month trough just under 111.00. The common currency was last at $1.1233, having slipped from a 3-1/2 month peak of $1.1377.

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