31/12/2025

BIZ & FINANCE WEDNESDAY | DEC 31, 2025

17

Yuan strengthens past key level of seven to US dollar

Thailand posts stronger exports, investment in November BANGKOK: Thailand’s economy in November expanded compared to the previous month, supported by higher exports and investment, but consumption fell over the period, the central bank said yesterday. Though overall domestic demand improved, helped by public and private investment, private con sumption declined with lower fuel and electricity usage offsetting an increase in spending on consumer goods and services, the Bank of Thailand said in a statement. Consumption should improve in December due to festive year-end spending, assistant governor Chaya wadee Chai-anant told a briefing. The central bank expects Southeast Asia’s second-largest economy to grow 2.2% this year and 1.5% in 2026. Economic growth was 2.5% last year. The economy, which has lagged regional peers since the pandemic, has struggled with multiple head winds in 2025, including US tariffs, high household debt, a border conflict with Cambodia and political uncertainty ahead of elections in early February. The baht has also strengthened beyond economic fundamentals and the central bank has measures to try to manage the currency, said the assistant governor. The baht has gained about 9% against the dollar so far this year, making it Asia’s second-best per forming currency, posing a threat to the competitiveness of Thailand’s export and tourism sectors. Exports, a key driver of the economy, rose 5.5% in November from a year earlier, while imports soared 17.3%, the central bank said, leading to a trade deficit of $0.2 billion, the central bank said. Thailand recorded a current account deficit of US$0.6 billion (RM2.4 billion) in November. Separately, Thailand's foreign tourist arrival numbers from Jan 1 to Dec 28 dropped 7.29% year-on-year to 32.6 million, the Tourism Ministry said yesterday. – Reuters

until the Lunar New Year, China’s biggest holiday, which next year falls in the middle of February. “Looking ahead into 2026, the yuan is expected to strengthen steadily, zig-zag higher,” the brokerage said in a note to clients. “However, the road will be bumpy, with continuous, drastic one-way appreciation unlikely.” Another brokerage, China Securities, forecast the yuan would fluctuate around 6.9 7.0 per dollar next year based on economic fundamentals. Taking into account the comparative appeal of China’s capital markets, the yuan could strengthen to 6.5-6.6 per dollar, the brokerage added. But over the short-term, China Securities cautioned that the yuan’s pace of appreciation would be affected by the central bank’s guidance rate and China’s relations with trading partners. “The trend of exports, Sino-US trade talks, and the international trade environment are all key elements” likely to affect the room for yuan appreciation, the brokerage said. Yuan Tao, analyst at Orient Futures, said managing the pace of yuan appreciation is a delicate balancing act for China’s central bank. “If the yuan rises too fast, it would badly hit China’s export sector. But yuan appreciation would help the economy’s reorientation toward consumption,” Yuan said. PBOC needs to balance “short-term pain and long-term gain”. – Reuters

o Chinese currency’s appreciation is due to weak greenback, exporters’ year-end selling rush

SHANGHAI: China’s onshore yuan broke through the key psychological level of seven to the dollar yesterday for the first time in 2½ years, defying weaker central bank guidance, as exporters rushed to sell US dollars before the year ends. In early afternoon trading, it hit 6.9951 per dollar, the strongest since May, 2023. The yuan has gained roughly 5% against a softening dollar since early April and is set to snap a three-year losing streak. The People’s Bank of China (PBOC) has sought to prevent the yuan from overshooting through weaker guidance rates and verbal warnings in state media, but has not been able to reverse the currency’s strengthening trend. “Yuan breaching 7/USD is more a signal than any real shock,” said Charu Chanana, chief investment strategist at Saxo in Singapore. “It shows that the PBOC is comfortable with some CNY strength – but it also raises the odds that they might manage the speed in 2026 so it doesn’t turn into a one-way momentum trade.” Yesterday, the central bank set the midpoint rate at 7.0348 per dollar, 236 pips weaker than Reuters’ estimate. The spot yuan is allowed to trade a maximum of 2% either

side of the fix each day. Yesterday, it rose 0.2%, its biggest intraday gain since late November. After a softer opening, the yuan soon rose and in early afternoon trading, it broke through the symbolic 7 per dollar level. In offshore trade, the yuan was at 6.9855 per dollar having breached the key level last week. Xing Zhaopeng, senior China strategist at ANZ, said that major Chinese state banks will close their books for the year today – 2025’s last trading day – effectively suspending dollar buying in the spot market and driving the yuan higher. Some investment banks had broadly expected the yuan to strengthen past the crucial level, with BofA Global Research anticipating the currency to be at 6.8 per dollar by fourth quarter of 2026. The average forecast of nine investment banks showed the Chinese currency is expected to strengthen to 6.92 per dollar at the end of next year. Guosheng Securities attributed the yuan’s recent strength to a weakening dollar and a rush to sell dollars by exporters who usually convert more foreign exchange receipts into local currency towards the end of the year. The brokerage expects the rush to extend

US allows Samsung, SK Hynix chipmaking tool shipments to China for 2026 SEOUL: The US government has granted an annual licence to Samsung Electronics and SK Hynix to bring in chip manufacturing equipment to their facilities in China for 2026, two people familiar with the matter said yesterday. Samsung, SK Hynix and TSMC had benefited from exemptions to Washington’s sweeping restrictions on chip-related exports to China. But the privilege known as validated end user status will end on Dec 31, meaning shipments of American chipmaking tools to their factories in China after that date will require US export licences. business hours. Keen to limit China’s access to advanced American technology, US President Donald Trump’s administration has been re-examining export controls that it thought were too relaxed under the Biden administration.

South Korea’s Samsung Electronics, the world’s top memory chipmaker, and second ranked SK Hynix count China as one of their key production bases especially for traditional memory chips, whose prices have been surging due to demand from AI data centres and tightened supplies. – Reuters

The approval is a temporary relief for the South Korean firms and follows a US decision earlier this year to revoke licence waivers given to some tech companies. One of the sources said that Washington introduced the annual approval system for exports of chipmaking tools to China.

Samsung and SK Hynix declined to comment while TSMC did not immediately respond to requests for comment. The US Department of Commerce was not immediately available for comment outside

India says its economy has overtaken Japan’s, eyes Germany next NEW DELHI: India has overtaken Japan as the world’s fourth-biggest economy – and officials hope to pass Germany within three years, the government’s end-of-year economic review calculates. IMF projections for 2026 put India’s economy at US$4.51 trillion, compared with Japan’s US$4.46 trillion. struggling to generate well-paid jobs for millions of young graduates.

“As one of the world’s youngest nations, India’s growth story is being shaped by its ability to generate quality employment that productively absorbs its expanding workforce and delivers inclusive, sustainable growth,” the note added. Prime Minister Narendra Modi this year unveiled sweeping consumption tax cuts and pushed through labour law reforms after economic growth hit a four-year-low, in the 12 months ended March 31. India’s rupee hit a record low against the dollar in early December – having dropped around 5% in 2025 – owing to ongoing worries about the lack of a trade deal with Washington and the impact of the levies on the country’s goods. India became the world’s fifth largest economy in 2022, when its GDP overtook that of former colonial ruler Britain, according to IMF figures. – AFP

New Delhi’s upbeat assessment comes despite economic worries after Washington in August hit New Delhi with huge tariffs over its purchases of Russian oil. India said continued growth reflects its “resilience amid persistent global trade uncertainties”. But other measurements offer a less rosy outlook. In terms of population, India overtook neighbouring China as the most populous nation in 2023. India’s GDP per capita was US$2,694 in 2024, according to the latest World Bank figures, 12 times smaller than Japan’s US$32,487, and 20 times smaller than Germany’s US$56,103. More than a quarter of India’s 1.4 billion people are aged between 10 and 26, according to government figures, and the country is already

Official confirmation however depends on data due in 2026 when final annual gross domestic product (GDP) figures are released, with the International Monetary Fund sug gesting India will cross over Japan next year. “India is among the world’s fastest growing major economies and is well positioned to sustain this mo mentum,” read the government eco nomic briefing note, which was released late Monday. “With GDP valued at US$4.18 trillion (RM16.9 trillion), India has surpassed Japan to become the world’s fourth-largest economy, and is poised to displace Germany from the third rank in the next two-and-a-half to three years, with projected GDP of US$7.3 trillion by 2030.”

A worker is seen atop an under-construction metro site near the Amazon India headquarters in Bengaluru on Monday. India says continued growth reflects its ‘resilience amid persistent global trade uncertainties’. – AFPPIC