Lee Hardman, Currency Analyst at MUFG, notes that the Asian currencies have been supported as well by the strengthening of the Chinese renminbi overnight. Key Quotes “The onshore renminbi has strengthened sharply by its largest daily percentage against the US dollar since July 2005 after the mainland Chinese markets re-opened following last week’s Lunar New Year holiday. It is mainly catch up strength after the offshore renminbi increased by around 1% against the US dollar last week amidst broad-based US dollar weakness. Comments over the weekend from PBoC Governor Zhou Xiaochuan have provided some support for the renminbi. He stated that “there’s no motive to depreciate the renminbi for the sake of net export expansion”. He condemned speculators for targeting the renminbi and warned that “China will not let market sentiment be dominated by these speculative forces”. He reiterated as well that “the trend is to rely further on the market to decide the level of the renminbi and to achieve a more flexible foreign exchange rate”. The PBoC is using as basket of currencies as a reference and appropriately managing any daily volatility in the renminbi against the US dollar as well using a wider range of economic data.” In contrast, the latest trade report from China released overnight painted a less reassuring picture. The report revealed that both the annual rate of export and import growth contracted more sharply than expected by -11.2% and -18.8% respectively in January. Import weakness will reinforce concerns over a sharper slowdown in domestic demand although economic data can be more volatile at this time of year.” For more information, read our latest forex news.