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Yuan revaluation coming soon? [Copy link] 中文

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Post time 2006-8-2 15:19:05 |Display all floors
China is preparing the ground for a faster revaluation of the yuan in order to defuse mounting tensions with Washington and prevent its foreign reserves exploding out of control, Daily Telegraph reported today.

The markets have seized on comments by Zhu Baoliang, a top state planner responsible for last year's 2.1pc mini-devaluation, who said it would be "appropriate" to let the yuan rise by 5pc a year.

Last week, Chinese premier Wen Jiabao called for "forceful measures" to cool the economy after breakneck growth of 11.3pc in the second quarter, noting that trade pressures were "intensifying".

US senators Charles Schumer and Lindsey Graham have given China until the end of September to revalue, claiming to have 67 votes in favour of punitive sanctions.

Tony Norfield, currency analyst at ABN Amro, said he expected Beijing to take action over coming days or weeks to head off sanctions, possibly by tripling the trading band to 1pc a day.

"We think they'll speed up the pace of daily moves. This would have propaganda benefits, allowing China to hail it as a significant new step towards liberalisation," he said.

China fears that its rickety banking system - burdened with $800bn (£430bn) in bad debts according to Standard & Poor's - is still too fragile to bear the strain of a strong yuan.

David Bloom, a currency expert at HSBC, said they were wise to move carefully. "They don't have the structure in place for a free-floating currency. You can't plunge overnight into very sophisticated capitalist markets," he said

"Those US politicians making all this noise just want a new enemy for the next James Bond movie," he said.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/08/02/cnchina02.xml

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Post time 2006-8-2 15:37:35 |Display all floors

why? i dunt understand some...

new enemy for the next james bond movie?


whats the logic? please enlighten me.
round about midnight. where theres venus and sunrise, theres home

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Post time 2006-8-2 15:51:52 |Display all floors
james bond movie is a fictional movie, and the enemy is fictional too.

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Post time 2006-8-2 20:50:13 |Display all floors
:0
thx a lot
round about midnight. where theres venus and sunrise, theres home

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Post time 2006-8-2 21:32:59 |Display all floors
chinese government is perfect in dealing with domestic political incident,

but poor at the deal with foreign monster!

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Post time 2006-8-5 07:19:29 |Display all floors

Subplot

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Post time 2006-8-20 11:29:46 |Display all floors

Watch out for that recession.

There are indicators pointing to a possible recession in USofA next year. Watch out for that one. Typically you will find that demand for goods such as toys, consumer electronics etc will be the first to drop but essentials such as food and fuel will be resilient.

The temporary stoppage of flow of oil from BP's Prudhoe Bay wells to USofA will only drive up the petrol price at the browser, this will raise inflationary pressure and lower productivity.

For Chinese exporters of such non-essential goods to USofA, it is high time you develop an internal market for you goods.

Aside from the balance of trade issue, China's growth is also causing inflationary pressure in other major economies. China has imported the inflation, this is not good for China. For example, last year China was forced to pay 71.5% more for iron ore. This year China was obliged to pay another 19% on top. Cheap Chinese labour won't offset that kind of price gouge in the long term.

It will be an issue for China if the USD devalues, seeing how China has a hugh USD reserve. The USD will buy less goods such as crude oil, iron ore etc overseas. On the other hand, if the RMB goes up against the USD, it will counter-act a devaluing USD.

Since resources are priced in USD, that being the global reserve currency, I have here some simple (and rather simplistic I must admit) examples:

Current x-rate: USD 1 = RMB 8
Iron ore @ USD20 per ton (delivered to port of loading)
1 ton costs US$20 = RMB160

Crude oil @ USD70 per barrel
1 barrel costs US$70 = RMB560

Revalued RMB: USD1 = RMB 5
Iron ore @ USD20 per ton (delivered to port of loading)
1 ton costs US$20 = RMB100

Crude oil @ USD70 per barrel
1 barrel costs US$70 = RMB350

In summary, there are significant benefits to China to *float* the RMB, but in a measured manner and certainly without broadcasting it to the market for speculators' benefits.

[ Last edited by cestmoi at 2006-8-20 12:01 PM ]

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