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Thread: RMB, The People's Currency

  1. #16
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    "Credit Suisse Selling Chinese Bonds Shows Markets Opening Up"

    US government would welcome this development, by trading without Dollars, it actual help to reduce the value of the dollars (in a small way) and boost US exports. Interesting huh? China is take actual steps to reduce the value of the dollar while they have one Trillion is US bonds, I am still trying to figure that part out.
    Last edited by xinhui; 10 Apr 09, at 00:20.

  2. #17
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    M2, the broadest measure of money supply, grew 25.5 percent, the central bank said on its Web site today. That’s the fastest since Bloomberg began compiling data in 1998 and more than the 21.5 percent median estimate in a survey of 12 economists.

    http://www.bloomberg.com/apps/news?p...X1U&refer=home


    I guess Wen does not worry about inflation at this point. Like US, China does not publish M3 figures, so we have no way to know how much new Yuan were printed during that period.

  3. #18
    Contributor Tomluter's Avatar
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    If Chairman Mao is back today. What would he think?
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  4. #19
    Professor (retired) Senior Contributor Merlin's Avatar
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    At Mao's time, the RMB could only be exchanged and used in China, and the official conversion rate was fixed.

    I walked outside the hotel, and there were quite a few people waiting outside, asking me to exchange their RMB into foreign currcency at black market rate.

  5. #20
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    Quote Originally Posted by Tomluter View Post
    If Chairman Mao is back today. What would he think?
    "I'm rich."

  6. #21
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    wow, now that is a shocker



    Geithner Refrains From Labeling China a Currency Manipulator
    http://www.bloomberg.com/apps/news?p...IoI&refer=home

    By Michael McKee

    April 15 (Bloomberg) -- U.S. Treasury Secretary Timothy Geithner refrained from labeling China as a currency manipulator, backtracking from an assertion he made during his confirmation hearings in January.

    In its first semiannual report on foreign-exchange policies since Geithner became secretary, the Treasury said that while the yuan remains “undervalued,” no country “met the standards” for illegal currency manipulation during the period of the report, from July 2008 through December 2008.

    The conclusion clashes with Geithner’s January 22 statement to a Senate panel that “President Obama -- backed by the conclusions of a broad range of economists -- believes that China is manipulating its currency.” Today’s shift may anger some U.S. lawmakers and trade unions who have sought measures to punish the Chinese and other trading partners perceived to have undervalued exchange rates.

    “Treasury did not find that any major trading partner had manipulated its exchange rate for the purposes of preventing effective balance-of-payments adjustment or to gain unfair competitive advantage,” today’s report said.

    By law, the Treasury has to enter direct talks with a country deemed to be manipulating its currency, and also seek redress through the International Monetary Fund.

    White House

    The White House was consulted on today’s report, a Treasury official told reporters in Washington on condition of anonymity. The official also said that the administration isn’t satisfied with what the person termed a slight movement versus the dollar in recent months.

    Geithner’s January remarks suggested a change in policy from the Bush administration, which had stopped short of using the term in criticizing China’s exchange-rate management. The last time a country was branded as a manipulator was China in 1994.

    The January comments led economists and policy makers from around the world to suggest that clashes over the yuan’s value might stoke tension between two of the world’s biggest economies and undermine cooperation to counter the global recession.

    In January, China’s Commerce ministry denied manipulating the value of its currency to promote exports and warned that accusations of government tampering in foreign exchange would fuel U.S. protectionism. People’s Bank of China Vice Governor Su Ning called Geithner’s allegations “untrue and misleading.”

    Repairing Ties

    Since that time, Geithner has worked to repair relations with China, the U.S.’s second-largest trading partner, behind Canada. In February, he pushed finance ministers and central bankers from the Group of Seven industrial nations to soften criticism of China’s economic policies, according to a person briefed on the matter.

    He also held a series of phone calls and meetings with Chinese officials, including Vice Premier Wang Qishan and Finance Minister Xie Xuren, according to details of Geithner’s schedule provided by the administration.

    In today’s report, released by the Treasury in Washington, Geithner said China “has taken steps to enhance exchange-rate stability,” and that “officials acknowledged in January the need for greater flexibility and the need to allow the exchange rate to adapt to an equilibrium level.”

    According to the Treasury, the yuan, also known as the renminbi, appreciated 16.6 percent in inflation-adjusted terms between the end of June 2008 and the end of February 2009. “As the crisis intensified, the currency appreciated slightly against the dollar when most other emerging market currencies fell sharply.”

    Yuan’s Moves

    China limited appreciation of the yuan against the dollar in July 2008 after the currency rose 21 percent against the dollar following the end of a fixed exchange rate three years earlier. From July 1 to the end of the year, the yuan rose 0.4 percent. Its value has been little changed since the beginning of the year, closing today at 6.8325 to the dollar.

    Geithner said China has enacted a large fiscal stimulus program, which should help spur domestic demand, strengthening the currency. Still, the Treasury report said that China’s low level of debt means it has “headroom to undertake further fiscal measures.”

    Given China’s trade surplus and reserve accumulation, the “Treasury remains of the view that the renminbi is undervalued,” Geithner said in a statement accompanying the report.

    The report noted that while the global recession forced an “unprecedented contraction in global trade” that led many currencies to depreciate against the dollar, many emerging market economies used their foreign exchange reserves to temper the effects.

    To contact the reporter on this story: Michael McKee in New York at mmckee@bloomberg.net
    Last Updated: April 15, 2009 16:00 EDT

  7. #22
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    in the meanwhile.............





    China Bought More U.S. Securities Even as Its Concerns Grew
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    By Vincent Del Giudice

    April 15 (Bloomberg) -- China, the U.S. government’s biggest creditor, increased its purchases of American securities in February just weeks before the country’s officials questioned whether such investments were safe.

    While China’s purchases slowed and most were in short-term Treasury bills, the country remained the largest foreign holder of Treasuries after its holdings rose 0.6 percent to $744.2 billion, according to a monthly report released in Washington.

    “It still comes down to holding the most valuable stuff,” Richard Yamarone, chief economist at Argus Research in New York, said before today’s report. “If you have a baseball card collection, and times get bad, you don’t sell the Honus Wagner or the Mickey Mantle rookie card,” he said, referring to two of the game’s biggest historical stars. “They have always been, and will always remain, the most desirable holdings.”

    Still, the governor of the People’s Bank of China, Zhou Xiaochuan, last month urged the establishment of a “super- sovereign reserve currency” after Chinese Premier Wen Jiabao said he’s “worried” a weaker U.S. dollar may hurt China’s investment. The U.S. needs China to sustain its purchases to fund billions’ worth of programs aimed at reviving the economy, about 70 percent of which reflects consumer spending.

    “If they are going to boost their economy by selling consumer goods to the U.S., accepting U.S. Treasuries is part of their bargain with the devil,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. U.S. Treasury bills, notes and bonds are considered the safest and most liquid, he said, and “February was a big safe- haven buying month given the stock market’s troubles.”

    No Dollar ‘Dumping’

    According to an analysis by Win Thin, a senior currency strategist at Brown Brothers Harriman & Co. in New York, today’s report shows “we are not seeing any wholesale dumping of dollar assets by China.”

    In an interview, Thin said the smaller increase in holdings of Treasury securities reflects a slowdown in capital flows between investors in China and other emerging markets rather than deliberate efforts on the part of the Chinese authorities.

    “China and the U.S. have a symbiotic relationship,” Thin said. “We need each other.”

    Foreign direct investment into China fell for a sixth month from a year earlier. Investment dropped 9.5 percent to $8.4 billion in March, the Chinese commerce ministry said at a briefing in Beijing today. That marked the first time since 2000 that investment from abroad has fallen for six straight months, according to Bloomberg data.

    Worldwide foreign direct investment fell 21 percent last year to $1.4 trillion because of the global recession and falling profits, according to estimates from the United Nations Conference on Trade and Development, and it’s likely to decline further this year, the agency said.

    Phone calls and an e-mail message to China’s embassy in Washington were not returned by press time.

    To contact the reporters on this story: Vincent Del Giudice in Washington at vdelgiudice@bloomberg.net
    Last Updated: April 15, 2009 15:09 EDT

  8. #23
    Official Thread Jacker Senior Contributor gunnut's Avatar
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    According to an analysis by Win Thin, a senior currency strategist at Brown Brothers Harriman & Co. in New York, today’s report shows “we are not seeing any wholesale dumping of dollar assets by China.”
    I guess it's better than Win Fat.
    "Only Nixon can go to China." -- Old Vulcan proverb.

  9. #24
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    Well, in traditional China, being FAT is a sign of a blessed person.
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  10. #25
    Windweaver Senior Contributor snowhole's Avatar
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    I guess this entry should probably go here but I'm not sure.

    FT.com / China - China reveals big rise in gold reserves
    China reveals big rise in gold reserves

    By Jamil Anderlini in Beijing and Javier Blas in London

    Published: April 24 2009 09:31 | Last updated: April 24 2009 19:06

    China has quietly almost doubled its gold reserves to become the world’s fifth-biggest holder of the precious metal, it emerged on Friday, in a move that signals the revival of bullion after years of fading importance.

    Gold rose to a three-week high of more than $910 an ounce after Hu Xiaolian, head of the secretive State Administration of Foreign Exchange, which manages the country’s $1,954bn in foreign exchange reserves, revealed China had 1,054 tonnes of gold, up from 600 tonnes in 2003.

    The news could spark interest in gold among other central banks. “When the largest holder of foreign exchange reserves discloses an increase in gold holdings, other countries may decide to think more carefully about underweight gold positions,” said John Reade, a precious metals strategist at UBS.

    The increase in China’s gold reserves has come primarily from domestic production and refining. However, the news raises questions about the future of Beijing’s foreign reserves policy.

    Ahead of the G20 summit in London this month, China suggested global reliance on the US dollar as a reserve currency should be reduced.

    China has been diversifying away from the dollar since 2005, when it broke the renminbi’s peg to the US currency and officially marked it to a basket of currencies, but it still holds more than two-thirds in US dollar-denominated assets by most estimates.

    As its trade surplus and forex reserves ballooned in recent years, Beijing continued to buy huge amounts of US Treasury bonds while raising the proportion of purchases it allotted to other currencies and to gold.

    China’s accumulation of gold has taken place as European central banks have gradually cut back back gold sales following a 1999 agreement to prevent the market from being flooded after prices were dragged sharply lower after the UK decided to sell part of its reserves.

    “China’s announcement signals a broader shift in central banks’ attitude towards gold,” said Philip Klapwijk, chairman of GFMS, the precious metal consultancy.

    Suki Cooper, a gold analyst at Barclays Capital, said China’s move was “reigniting gold’s relevance as a monetary asset”.

    European central banks agreed to limit gold sales to 500 tons a year in 1999, under the Central Bank Gold Agreement after a UK decision to sell part of its gold reserves dragged prices sharply lower.

    Since 1999, central banks in Europe have sold large amounts of gold, investing the proceeds into bonds. But in the past two years they have curtailed their sales significantly while central banks outside Europe became net buyers of bullion.

    China’s forex reserves grew from $623bn at the start of 2005 to $1,906bn at the end of September last year but in the last six months the spectacular growth has slowed to a virtual stop, with reserves rising by just $7.7bn (€5.8bn, £5.2bn) in the first quarter.

    That means smaller new purchases of everything from US Treasuries to gold.

    Paul Atherley, Beijing-based managing director of Leyshon Resources, said that even after the latest purchases China had a very small percentage of its reserves in gold, far below the US or other developed countries.

    “Those [gold] holdings are still too low in terms of the size of its economy and the growing significance of its currency,” he said.

    The announcement boosted gold prices to a three week high above $910 an ounce as investors bet other countries could follow.

    Russia has being an active buyer, following Beijing’s similar pattern of purchases from local miners. China became last year the world’s largest producer of gold, outranking South Africa.

    Since the financial crisis started, investors have piled record amounts of money into gold, boosting prices to above $1,000 an ounce. Gold hit a low of $250 an ounce a decade ago, when central banks started selling the metal.

    Additional reporting by Chris Flood

    Copyright The Financial Times Limited 2009
    夫唯不爭,故天下莫能與之爭。

  11. #26
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    Not a surprise, investors saw that coming from months ago. Panda baby, I picked up a few panda for my girl last year, lucky she is too young to know what to do with them.

  12. #27
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    I'm surprised that they bought mostly from domestic producers.

  13. #28
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    Time ripe to internationalise yuan -Bank of China
    Fri May 15, 2009 4:01am EDT

    SHANGHAI, May 15 (Reuters) - The time is ripe for the internationalisation of the yuan, not least because of growing corporate interest in settling trade transactions in the Chinese currency, Bank of China Chairman Xiao Gang said on Friday.

    China is preparing a pilot scheme that will allow designated companies in southern China that do export-import business with Hong Kong and Macau to settle their deals in yuan <CNY=CFXS> instead of in Hong Kong or U.S. dollars.

    It has also said that members of the Association of Southeast Asian Nations would be permitted to use yuan in their trade with China's southeastern regions of Guangxi and Yunnan. [ID:nPEK272339]

    Speaking at a financial forum, Xiao said Bank of China (3988.HK: Quote, Profile, Research, Stock Buzz)(601988.SS: Quote, Profile, Research, Stock Buzz), the country's main foreign-currency bank, would be one of the first lenders to participate in the scheme once the final rules are published. He gave no timeframe for that to happen.

    The success of the scheme would depend on the attitude of exporters and importers, which in turn would be partly driven by the stability of the yuan, Xiao said. (Reporting by Langi Chiang and Jacqueline Wong; Editing by Alan Wheatley and Ken Wills)

  14. #29
    Professor (retired) Senior Contributor Merlin's Avatar
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    The Yuan will gain strength against the US dollar this year.

    Yuan May Gain 5 Percent This Year as Usage Expands, Bosera Says

    May 15 (Bloomberg) -- The yuan may gain as much as 5 percent against the dollar this year as China promotes wider use of the currency, according to Bosera Asset Management Co., the nation’s second-largest fund company.

    China has signed 650 billion yuan ($95 billion) of foreign- exchange swap agreements in the past six months with countries including South Korea, Argentina and Belarus and plans to promote the use of the currency in cross-border trade. The renminbi may become one of the world’s three major currencies within 30 years, joining the dollar and the euro, Li Quan, executive vice president of Bosera, said in a telephone interview yesterday.

    “Demand for yuan-denominated assets will grow as China is trying to make the yuan a global currency,” said Shenzhen-based Li, whose firm oversees 178 billon yuan of assets. “At the same time, concern about dollar devaluation will prompt investors to inject more capital into emerging markets, especially China.”

    The Dollar Index, a gauge of the greenback’s strength, slipped 2.6 percent since the end of April, set for a third monthly decline, as the U.S. borrows unprecedented amounts to spend its way out of recession. Asia ex-Japan equity funds drew $1.9 billion in the week though May 13, according to Cambridge, Massachusetts-based research firm EPFR Global.

    Li said capital inflows have increased since the swap agreements were signed. The Shanghai Composite Index, which tracks the bigger of China’s two stock exchanges, has surged 45 percent this year.

  15. #30
    Professor (retired) Senior Contributor Merlin's Avatar
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    Yuan may be a reserve currency by 2020-China official

    The article's title is a bit ambigious as it really means one of the reserve currencies by 2010. Currently the yuan is not convertable for purely financial purposes.

    Yuan may be reserve currency by 2020-China official

    BEIJING, May 20 (Reuters) - In the latest advertisement of China's currency ambitions, an official suggested on Wednesday that the yuan could make up more than 3 percent of global foreign exchange reserves by 2020.

    The yuan <CNY=CFXS> is not convertible for purely financial purposes, ruling it out as a reserve currency for now, but China has started to carve out a bigger international role for its money.

    A pilot scheme will start soon in Hong Kong to use the yuan to settle trade with selected companies in southern Guangdong province; China has signed yuan swap deals totalling 650 billion yuan ($95 billion) since December with six central banks; and on Tuesday two foreign banks said they had won permission to float yuan bonds in Hong Kong. [ID:nSHA239335]

    Zhang Guangping, vice-head of the Shanghai branch of the China Banking Regulatory Commission, acknowledged that a series of conditions would have to be met for the yuan internationalisation trend to gather momentum.

    China would have to gradually make the yuan convertible on the capital account; it needed a more liquid foreign exchange market; its bond markets and banking system needed to be more developed; and there had to be proper monitoring of cross-border capital flows, Zhang told a foreign exchange conference.

    But, hypothetically, he said there was no reason why the yuan could not account for over three percent of global reserves by 2020, the target date for Shanghai to have evolved into an international financial centre.

    That would mean the yuan displacing the Japanese yen as the fourth-largest currency in reserve portfolios, behind the pound, the euro and the dollar. ....
    Last edited by Merlin; 20 May 09, at 08:43.

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