The Pound Sterling to Russian Ruble (GBP/CNY) and Chinese Yuan (GBP/CNY) exchange rates were both trending lower in Monday’s European session after some chaotic data releases led to significant market movement.
The Chinese Yuan exchange rate was offered little support when Chinese Trade Balance, Imports and Exports ecostats printed unfavourably and far below forecasts.
Chinese Gross Domestic Product (GDP) figures are due out on Wednesday and after Monday’s data, many economists are suggesting the nation could have performed worse than previously predicted.
Monday’s Trade Balance stat came in at only $3.08B in March rather than the $40.20B forecast, after February’s $60.62B.
ANZ economist Hao Zhou commented: ‘It’s quite a sluggish number. This likely points to sub-7% economic growth [in the first quarter].’
Chinese exports contracted by 15% on the year in March while imports also shrank by -12.7%.
As a result of the weaker-than-forecast ecostat, many industry experts are suggesting that there could be further weakness in the near future for the Chinese Yuan exchange rate.
Economist Andrew Polk stated: ‘The really weak trade surplus has implications for the weakness in the Reniminbi. So we might see more weakness going forward.’
Bank of Russia Rate Cut Speculation Spurs Russian Ruble (RUB) Rally
Meanwhile, the Russian Ruble has become the best performing currency of 2015 after previously being labelled the worst.
The Ruble extended its performance as the most improved currency worldwide on Monday, which caused Goldman Sachs and Morgan Stanley to suggest that the Bank of Russia was likely to cut interest rates.
The Bank of Russia cut interest rates by 200 basis points in January, lowering the benchmark rate to 15%, and followed this with another 100 basis point decrease in March.
Investors are now pricing in the possibility of an additional 200 basis point cut at the next Bank of Russia policy meeting.
Economist Natalia Orlova stated: ‘Expecting this step, investors should be in a rush to take exposure to Russian assets and we expect the Ruble to stay strong in the coming weeks.’
Furthermore, the Ruble was offered some support from an increase in the price of oil as investors expect the value of crude to soon bottom out and rebound.
Danske Bank strategist Vladimir Miklashevsky suggests that those looking for higher yields are ‘loading up on both Rubles and bonds. The jump in oil prices is the second leg supporting the Ruble, despite the correlation weakening lately.’
Pound Sterling to Russian Ruble (GBP/RUB) and Chinese Yuan (GBP/CNY) Exchange Rate Forecast
The Pound Sterling to Chinese Yuan (GBP/CNY) and Pound Sterling to Russian Ruble (GBP/RUB) exchange rates are expected to experience major swings on Tuesday with the release of the UK Consumer Price Index (CPI).
Any negative drop in inflation could pressure the Pound Sterling significantly lower, while any favourable ecostat could send the GBP/CNY and GBP/RUB exchange rates soaring.
The Pound Sterling to Chinese Yuan (GBP/CNY) exchange rate is trading at 9.0826. The Pound Sterling to Russian Ruble (GBP/EUB) exchange rate is trending in the region of 76.7500.
