Regulatory and growth concerns from China to hit Asian and commodity currencies – MUFG

China growth concerns continue to remain in focus which is acting as a weight on the performance of Asian and commodity related currencies in the near-term. What’s more, widening regulatory curbs from China are also damaging the mentioned currencies, economists at MUFG Bank report.

China growth and regulation uncertainty remain focus

“The release yesterday of the latest new credit data from China revealed that credit growth expanded at its slowest pace since February 2020. The official China Securities Journal newspaper reported earlier this month that the growth rate of outstanding credit may bottom out and rebound in the fourth quarter of this year, providing a signal that policy setting may begin to turn more supportive for growth in China as the pace of slowdown is starting to draw more concern.”

“The release yesterday of a five year-year blueprint from the State Council and Communist Party’s Central Committee stating that they would ‘actively’ work on legislation in areas including national security, technology and monopolies is a further concern. The report highlights that regulatory policy uncertainty is set to persist going forward.”

“The latest developments from China are continuing to create a less favourable backdrop for Asian and commodity-related currency performance.”