U.S. exchange-traded funds that invest in Chinese stocks were trading higher on Friday afternoon, on track for their best day in a month after China ramped up its efforts to support the country’s flagging currency as investors’ concerns over the economic weakness persist.
The Invesco Golden Dragon China ETF PGJ, which tracks the American depositary shares of companies based in China, rose 3.3% on Friday, while the KraneShares CSI China Internet ETF KWEB, which offers exposure to Chinese software and information technology stocks, gained 3.4%. The iShares MSCI China ETF MCHI and the SPDR S&P China ETF GXC each surged 2.4%, according to FactSet data.
China’s central bank will cut the foreign-exchange reserve requirement ratio to 4% from 6% beginning Sept. 15. The move is expected to increase the supply of foreign currencies available in local markets, making the Chinese yuan more appealing for domestic investors.Based on about $822 billion foreign-exchange deposits in July, the 200-basis-point cut in the reserve requirement ratio could release about $16 billion, which will improve the supply of the U.S.
The onshore yuan USDCNY, +0.04% weakened around 1.7% against the dollar in August, extending its losses for the year to nearly 5%, according to FactSet data. The offshore yuan USDCNH, -0.08% was trading at 7.27 per dollar Friday afternoon.
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Source: FXStreetNews - 🏆 14. / 72 Read more »
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