$3bn Loss for China’s Top Developers Caused by Weakening of Yuan
The aggregate net foreign exchange losses for 24 of the top 30 mainland listed Chinese developers by contracted sales before the COVID crackdown in 2020 totaled 21.25 billion yuan ($2.75 billion) for the first six months of this year, according to research by Nikkei Asia. The foreign exchange losses are on paper only and the actual loss or gain depends on the exchange rates of the respective due dates. But the figures act as a gauge of exchange rate risks involved with the foreign currency-denominated debts of distressed property developers, especially when the yuan dipped to a 16-year low against the dollar on Sept 8. Alicia Garcia Herrero, chief Asia Pacific economist at Natixis, views the yuan depreciation as a result of increased liquidity due to cuts in reserve requirement ratios and interest rates by the People’s Bank of China, which is under stress from the real estate sector. “Both, together with the now negative portfolio flows into China, have weakened the yuan,” she sa...
