OREANDA-NEWS. The vote by the UK last week to leave the EU could increase China's exports in the long term.

The UK's vote to leave the EU is expected to lead to the further deprecation of the pound but the appreciation of the US dollar, which will in turn weaken the value of the Chinese yuan. The majority of Chinese exporters use the dollar for their trade and then use the yuan for revenue settlements, so a weaker yuan will enable them to reduce their selling prices and increase their revenues.

But a weaker yuan value will affect importers, especially those for manganese, chromium and nickel ores as well as ferro-chrome, ferro-niobium and selenium, because they have to pay more yuan to offset the stronger dollar. Imports are unlikely to fall sharply because China relies heavily on imports of these materials owing to its own scarcity of resources.

The benchmark exchange rate adopted by the Bank of China fell to 6.63 yuan against the dollar, compared with 6.59 on 24 June, and 6.57 at the beginning of this month. The value of the yuan is expected to continue weakening in the coming weeks.

Along with weak physical demand and export duties, the appreciation of the yuan was one of the main factors keeping Chinese producers away from the global market in recent years. But more producers could look to restart their overseas businesses to take advantage of the weaker yuan.