SHANGHAI, China, July 23 /Xinhua-PRNewswire/ -- People’s Bank of China releases figures for April, May and June with the following indicator changes:
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Indicator Change
June 2007: 210.9
May 2007: 208.4
Month-to-month change: 1.18%
June 2006: 184.7
Year-to-year change: 14.22%
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Highlights
In June 2007, the Renminbi Pressure Indicator (RPI) score rose 1.18 percent as China’s foreign exchange reserves increased to US$1.33 trillion, up 42 percent over last year. The deposit interest rate at banks remained constant for the second consecutive month, at 3.06 percent. The yuan continued to appreciate and, as of June 29, traded at 7.65 yuan per U.S. dollar.
Analysis
The relatively small appreciation in the yuan and unprecedented foreign exchange reserves continued to push the RPI higher in June, to 210.9 from 208.4 in May. Over the period, the RPI grew by 1.18 percent. The bank deposit rate increased 0.27 percentage point in May.
Of the 1.18 percent increase in June, 1.03 percent can be attributed to increasing foreign reserves and 0.15 percent to yuan appreciation. The monthly trade surplus reached an all-time high of US$26.9 billion, up from US$22.5 billion the previous month. The 19.7 percent increase is partly due to the announcement of tax rebates reductions on more than 2,800 export products, with exporters trying to fill orders before the cuts took effect on July 1. Interest rates remained constant in June. The growth in China’s trade balance and foreign exchange reserves-the world’s largest-has shown no signs of slowing, despite the 8 percent yuan appreciation that began with the exchange rate revaluation in July 2005.
The indicator frequency is dependent upon the release of foreign exchange data from the People’s Bank of China. In mid-July, the bank released figures for April, May, and June. Over that period, the RPI grew by 4 percent.
Methodology
The RPI is based on a monthly examination of the interaction between the following variables to compute overall cumulative exchange rate pressure: the percentage change in the spot exchange rate, the percentage change in foreign exchange reserves, and the change in domestic interest rates. The indicator measures the pressure on China’s currency relative to the U.S. dollar. It is set equal to 100 on January 1, 2000. Increases in the RPI reflect appreciation pressure on the renminbi (RMB).
Xinhua Finance/Milken Institute China Indicators
The Xinhua Finance/Milken Institute China Indicators provide investors, analysts, and financial professionals insight into China’s money and capital markets. Five of the eight indicators have been launched since November 2006: the Renminbi Pressure Indicator, the Chinese IPO Indicator, the Market Adjusted Debt (MAD) Indicator, the Banking Strength Indicator (BSI), and the Adjusted Trade and Finance (ATF) Indicator. The remaining three indicators (the China M&A Indicator, the China Privatization Indicator, and the China Corporate Governance Indicator) will be launched later this year.
Period Coverage and Frequency
The indicator covers the period from November 30, 1980, through June 2007. Data are available from the Milken Institute upon request. There will be a two- to four-month delay in reporting values for the indicator, depending on the release of information from authorities in China.
Sources of Data
The data used in the construction of the indicator are obtained from the International Monetary Fund, People’s Bank of China, and State Administration of Foreign Exchange.
To view additional information, visit http://www.xinhuafinance.com/indicators/ and http://www.milkeninstitute.org/chinaindicators/.
About Xinhua Finance Limited
Xinhua Finance Limited is China’s premier financial information and media service provider and is listed on the Mothers Board of the Tokyo Stock Exchange (symbol: 9399) (OTC ADRs: XHFNY). Bridging China’s financial markets and the world, Xinhua Finance’s proprietary content platform, comprising Indices, Ratings, Financial News, and Investor Relations, serves financial institutions, corporations and re-distributors worldwide. Through its subsidiary Xinhua Finance Media Limited (NASDAQ: XFML), Xinhua Finance leverages its content across multiple distribution channels in China including television, radio, newspaper, magazine and outdoor media. Founded in November 1999, Xinhua Finance is headquartered in Shanghai, with offices and news bureaus spanning 11 countries worldwide.
For more information, please visit http://www.xinhuafinance.com/.
About The Milken Institute
The Milken Institute is a nonprofit, independent economic think tank whose mission is to improve the lives and economic conditions of diverse populations around the world by helping business and public policy leaders identify and implement innovative ideas for creating broad-based prosperity. The Milken Institute has extensive expertise in China and conducts ongoing research on China’s banking and capital markets. It is based in Santa Monica, Calif. For more information, please visit http://www.milkeninstitute.org/.
