Under-fire yuan at right level, says China central bank official

China’s yuan has weakened by almost 2.4 percent since the latest US threat to extend tariffs on Chinese goods. (AFP)
Updated 13 August 2019

Under-fire yuan at right level, says China central bank official

  • The yuan has weakened by almost 2.4 percent since US President Donald Trump threatened earlier this month to impose more tariffs on Chinese goods from Sept. 1

BEIJING: China’s yuan is at an appropriate level currently and two-way fluctuations in the currency will not necessarily cause disorderly capital flows, a senior official at the People’s Bank of China said.
The yuan has weakened by almost 2.4 percent since US President Donald Trump threatened earlier this month to impose more tariffs on Chinese goods from Sept. 1, though there are signs China is trying to stem the declines.
“The current level of RMB exchange rate is appropriately aligned with fundamentals of China’s economy and market supply and demand,” Zhu Jun, head of the central bank’s international department, said in an interview with Reuters.
She said China was “shocked” by the US Treasury Department’s move last week to label China a currency manipulator, hours after Beijing let the yuan drop through a key support level to its lowest point in more than a decade.

HIGHLIGHTS

• External shocks may drive yuan moves.

• Moves unlikely to spur disorderly fund flows.

• China able to cope with consequences.

But Zhu asserted that China will be able to “navigate all scenarios” arising from Washington’s currency-manipulator label.
In the short run, external shocks will also play a role by influencing the yuan’s movements, she said. “That said, as long as RMB moves in an orderly manner based on market supply and demand, such movements in either direction do not necessarily mean disorderly movement of capital flow,” Zhu said. The yuan is also known as renminbi, or RMB.
The yuan will be supported by China’s solid economic fundamentals, a stable debt ratio, contained financial risks, adequate foreign exchange reserves, and favorable interest rate spreads between China and major advanced economies, she said. “Over the medium and long term, we have full confidence in RMB as a strong currency,” Zhu said.


Gulf Marine CEO quits after review sparks profit warning

Updated 22 August 2019

Gulf Marine CEO quits after review sparks profit warning

  • Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence

DUBAI: Gulf Marine Services said on Wednesday Chief Executive Officer Duncan Anderson has resigned as the oilfield industry contractor warned a reassessment of its ships and contracts showed profit would fall this year, kicking its shares 12 percent down.

The Abu Dhabi-based offshore services specialist said a review by new finance chief Stephen Kersley of its large E-class vessels operating in Northwest Europe and the Middle East pointed to 2019 core earnings of between $45 million and $48 million, below $58 million that it reported last year.

A source familiar with the matter told Reuters that Anderson, who has served as CEO for 12 years, was asked to step down. Anderson could not be reached for comment.

The company, which in the past predominantly operated in the UAE, expanded operations and deployed large vessels in the North Sea and Saudi Arabia nine years ago and listed its shares in London in 2014.

Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence.

The North Sea has seen a revival in production in recent years due to new fields coming on line and improved performance by operators following the 2014 oil price collapse.

Still, the basin’s production is expected to decline over the next decade, according to Britain’s Oil and Gas Authority.

“(The CFO’s) review has coincided with a pause in renewables-related self-propelled self-elevating support vessels activity in the North Sea, which will impact several of the higher day-rate E-Class vessels,” Investec wrote in a note.

Gulf Marine appointed industry veteran Kersley as chief financial officer in late May as it sought to halt a slide which has seen the company’s shares fall nearly 80 percent last year and another 23 percent so far this year.

The company said market conditions remained challenging and that it was still in talks with its financial advisors regarding a new capital structure.

“Management, the new board and the group’s advisors, have been in negotiation with the group’s banks on resetting its capital structure and progress has been made,” it said in a statement.

Last year, Gulf Marine said contracts were delayed into 2019 as the company was seen to be in breach of certain banking covenants at the end of 2018.

The company said it was still in talks with its banks and individual lenders with hopes of getting a waiver or an agreement to amend the concerned covenants.