(Globe & Mail)
Surprise vow to let yuan gradually rise designed to ease increasing pressure from world leaders ahead of G20 summit
China has moved to fend off a barrage of expected criticism against its economic policies from world leaders at this week’s G20 summit in Toronto by issuing a surprise pledge to let its currency gradually rise against the U.S. dollar.
However, despite the promise, the yuan opened Monday at exactly the same rate that it has spent every day since July, 2008, at about 6.83 to the U.S. dollar. The People’s Bank of China said on its website Sunday that despite the new policy, the value of the yuan would remain “basically stable.”
Markets in Japan and South Korea, however, were up in early trading, reflecting the optimism felt by foreign manufacturers who saw the yuan’s artificially low value as giving Chinese exporters an unfair advantage.
The unexpected promise on the weekend from China’s central bank to allow for a gradual increase in the value of the yuan will serve to defuse mounting political tensions over China’s long-standing policy of keeping its currency artificially low to boost the economic performance of its key export sector. Read more here.
Related:
• Yuan appreciation not guaranteed (Financial Post)
• China Unshackles Yuan Ahead of G20 (Reuters)
Showing posts with label U.S. Dollar. Show all posts
Showing posts with label U.S. Dollar. Show all posts
Monday, June 21, 2010
Tuesday, April 27, 2010
Brazil will Impose Import Levies to Face “Cheap” US Dollar, Unless Accord is Reached
(MercoPress)
Brazil’s government may take additional steps to limit gains in the local currency (Real) should advanced economies favor policies that keep their currencies weak, Finance Minister Guido Mantega said. “We will take further measures if we don’t reach an agreement” Guido Mantega said in New York. Last year, Brazil implemented a tax on foreign purchases of stock and fixed-income investment in a bid to stem the currency’s advance.
Mantega said he was “worried” after last weekend’s International Monetary Fund (IMF) meetings in Washington, where officials from the US and other developed nations said they intend to keep their benchmark interest rates low. Reduced lending rates can weaken currencies by prompting investors to shift their money to countries where rates are higher.
“I told my colleagues we won’t just watch the deterioration of our situation,” Guido Mantega said. A stronger Real would put Brazilian exporters at a disadvantage by making their goods more expensive in dollar terms. After gaining over 30% last year, the best performance against the US dollar among the 16 most traded currencies tracked by Bloomberg, the Real has lost 0.1 percent in 2010. Read more here.
Brazil’s government may take additional steps to limit gains in the local currency (Real) should advanced economies favor policies that keep their currencies weak, Finance Minister Guido Mantega said. “We will take further measures if we don’t reach an agreement” Guido Mantega said in New York. Last year, Brazil implemented a tax on foreign purchases of stock and fixed-income investment in a bid to stem the currency’s advance.
Mantega said he was “worried” after last weekend’s International Monetary Fund (IMF) meetings in Washington, where officials from the US and other developed nations said they intend to keep their benchmark interest rates low. Reduced lending rates can weaken currencies by prompting investors to shift their money to countries where rates are higher.
“I told my colleagues we won’t just watch the deterioration of our situation,” Guido Mantega said. A stronger Real would put Brazilian exporters at a disadvantage by making their goods more expensive in dollar terms. After gaining over 30% last year, the best performance against the US dollar among the 16 most traded currencies tracked by Bloomberg, the Real has lost 0.1 percent in 2010. Read more here.
Wednesday, March 10, 2010
Loonie at Par by Summer: Economists
(CBC News)
Interest rate increases will drive the Canadian dollar back up to parity with its U.S. counterpart by this summer, according to a growing chorus of economists.
The latest prediction of parity came Wednesday from CIBC World Markets. Its forecast is based on the expectation that the Bank of Canada will hike its key lending rate in July, at least six months ahead of the first hike by the U.S. Federal Reserve. “Indeed, we’ve already seen the Canadian dollar gain several cents in recent weeks as the market began to firm up expectations” of a July rate hike in Canada, says CIBC chief economist Avery Shenfeld.
The loonie was quoted at 97.48 cents US in early Wednesday trading. It’s gained almost 3.5 cents against the greenback in the last two weeks.
CIBC’s currency outlook sees the loonie rising to $1.02 US by September before slipping back to 97 cents US by the end of the year.
While the Bank of Canada’s early rate hike is one of the main catalysts of the dollar’s rise, it isn’t the only one, CIBC says. The investment bank also lists rising demand for commodities as a reason. It sees the dollar benefiting from rising oil, mineral and fertilizer prices as Canadian producers “repatriate profits.” Read more here.
Interest rate increases will drive the Canadian dollar back up to parity with its U.S. counterpart by this summer, according to a growing chorus of economists.
The latest prediction of parity came Wednesday from CIBC World Markets. Its forecast is based on the expectation that the Bank of Canada will hike its key lending rate in July, at least six months ahead of the first hike by the U.S. Federal Reserve. “Indeed, we’ve already seen the Canadian dollar gain several cents in recent weeks as the market began to firm up expectations” of a July rate hike in Canada, says CIBC chief economist Avery Shenfeld.
The loonie was quoted at 97.48 cents US in early Wednesday trading. It’s gained almost 3.5 cents against the greenback in the last two weeks.
CIBC’s currency outlook sees the loonie rising to $1.02 US by September before slipping back to 97 cents US by the end of the year.
While the Bank of Canada’s early rate hike is one of the main catalysts of the dollar’s rise, it isn’t the only one, CIBC says. The investment bank also lists rising demand for commodities as a reason. It sees the dollar benefiting from rising oil, mineral and fertilizer prices as Canadian producers “repatriate profits.” Read more here.
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