In order to do so, according to the statement, the central bank reapplied to its model a “countercyclical factor.”

The tool, that was used previously to counteract market forces, essentially reasserted the central bank’s heavier hand in setting the currency’s value–and its renewed usage marks the latest in quickening steps to support the yuan.

Early this month, the central bank reimposed a yuan-trading requirement that made it costlier for investors to wager against the currency. According to Chinese officials and banking executives, Central-bank officials have also been warning commercial banks and other market participants against speculative trading in the yuan.

For most of the year, the PBOC has taken a more hands-off approach to the traditionally tightly tethered currency, even as the yuan dropped nearly 10% in value against the US dollar between April and mid-August.

The yuan’s slump is rekindling concerns among officials that businesses and individuals may rush to take money out of China. The Trump administration, meanwhile, suspects that China deliberately wants a weaker currency— to help exporters and ease the impact of tariffs. Trump has openly criticized Beijing for manipulating the yuan’s value this past week.

Eswar Prasad, a Cornell university economist stated that the policy shift “seems aimed at reducing the risk of speculative outflows and also deflecting criticism from Washington.”

The yuan’s slide against a strong dollar makes it one of the worst-performing currencies in Asia at the moment. It ended at 6.8789 per dollar Friday in mainland trading– close to its weakest level in a year.

In Friday’s statement, the China Foreign Exchange Trade System cited the strengthening dollar and the trade friction as the main reasons investors kept bidding down the yuan. The reapplication of the “countercyclical factor,” it said, could help the yuan remain largely stable.

This week, a fresh round of trade negotiations between the US and China governments failed to produce any visible signs of progress in settling the trade dispute.

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Qatar has pledged to invest $15bn in Turkey as Ankara rolls out measures to strengthen the lira amid an ongoing trade spat with the US.

Turkey, which set up a military base in Qatar in 2015, sent more troops as the crisis took hold. It also opened up an airlift to send food to Doha.

President Recep Tayyip Erdogan’s spokesman Ibrahim Kalin tweeted: “Turkish-Qatari relations are based on solid foundations of true friendship and solidarity.”

Qatar has pledged $15 billion of direct investments in Turkey.
Turkish-Qatari relations are based on solid foundations of true frienship and solidarity.

— Ibrahim Kalin (@ikalin1) August 15, 2018

Sonar Cagaptay, director of the Turkish program at the Washington Institute, called the Qatari investment as a “big deal that could build investor confidence in Turkey, staving off potential economic collapse.”

He continued: “The Qataris believe Turkish troop deployment saved them from Saudi-UAE invasion during the 2017 Qatar-GCC crisis.”

“This may be how Qatar is paying the favour back.” He added.

Big deal that could build investor confidence in Turkey, staving off potential economic collapse. The Qataris believe Turkish troop deployment saved them from Saudi-UAE invasion during the 2017 #Qatar–#GCC crisis. This may be how Qatar is paying back the favor #TurkeyCrisis https://t.co/tgUEYsrHGE

— Soner Cagaptay (@SonerCagaptay) August 15, 2018

Qatar’s financial pledge and Ankara’s crackdown on short-selling has helped the lira bounce back. It has now risen to about 5% to TL6.04 against the dollar. There had been fears that Turkey would need a bailout from the International Monetary Fund as the currency plunged more than 20% last week. For now, this situation has been averted.

“This is part of the Turkish government’s strategy to avoid the IMF by finding alternative external support,” Mohamed El-Erian, chief economic adviser at Allianz, said.

#Bloomberg reporting #Qatar pledged $15 billion "in direct investments in #Turkey."
This is part of the #Turkish government's strategy to avoid the #IMF by finding alternative external support.
To be a sustainable stabilizer, funding needs to be larger and reach the central bank

— Mohamed A. El-Erian (@elerianm) August 15, 2018

Ankara also announced new tariffs on US imports, adding duties of 50% to 140% on alcohol, cars and rice. Erdogan has remained headstrong and has shown no sign of ending his diplomatic spat with Donald Trump.

The post Qatar to invest $15bn in Turkey amid the lira currency crisis appeared first on International Finance.

In South Korea, the Kospi gained 0.37%. Tech was mixed – with some Apple suppliers giving up erly gains that were made after the company beat earnings expectations. LG Innotek shed -1.84% after rising more than 2% previously.

Chinese shares slipped into the negative, as investors absorbed trade headlines and the release of a private survey of Chinese manufactring , which was found to meet expectations. The Caixin/ Markit Purchasing Manager’s Index came in at 50.8, which was down from 51.0 in June. The Shanghai Composite edged down by 0.32% and the blue-chip CSI 300 index tracked lower by 0.4%

The Hang Seng Index, of Hong Kong pared early gains to trade marginally lower – with Apple supplier Sunny Optical up 1.24%. Steep losses were seen in the real estate sector though.

The latest development in the ongoing trade dispute between the two largest ecnomies in the world came after US imposed tarriffs on $34bn worth of Chinese goods in early July—a move that met with rapid retaliation from Beijing.

MSCI’s index of shares in Asia Pacific, minus Japan, advanced 0.08% in the afternoon trade – with the slight advancement—following the news that US and China are attempting to restart trade talks.

Representatives of US Treasure Secretary Steven Mnuchin and Chinese Vide Premier Liu He remain in private talks to resume negotiations on trade matters – in order to avoid a full-on trade war – reported Bloomberg news. Munchin has told CNBC last week that “quiet conversations” were Beijing had continued to take place.

The post Major Asian markets remain mixed during the US-China trade dispute appeared first on International Finance.

In the meanwhile, India has raised taxes on 29 US-imported products including agricultural goods, iron and steel products, again in retaliation to US tariffs. The new duties are expected to come into effect from August 4, 2018 and expected to affect US almonds, walnuts and chickpeas, among others. India is a top buyer of US almond exports and so the move is expected to hurt American farmers.

The Trump administration announced in March that it would introduce tariffs of 25% on steel and 10% on aluminium imported into the US. After being deferred, the duties on steel and aluminium went ahead on 1 June and affect the EU, Canada, Mexico and other close US allies, including India.

The EU has introduced a 50% duty on goods such as footwear, some types of clothing and washing machines.
The US tariffs are a strong message from President Trump on trade exploitation and unfair business practices.

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