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....The discontent about China’s currency peg to the dollar isn’t confined to the U.S. Capitol Hill, corn growers, steelmakers, and textile companies. From Mumbai to Bangkok, Asian companies also say Chinese rivals have an unfair advantage because of the Yuan-dollar link. The dollar has declined 14% in the past year against the currencies of six major trading partners, while other neighboring currencies of China have strengthened.
static.seekingalpha.com/uploads/2009/11/16/...china_forex.png" style="max-width:560px" />
For instance, South Korea’s won gained 8% against the Yuan in the past six months. Japan’s yen has risen 6%, while India’s rupee gained 6% and the Thai baht 4%. This has prompted Asian central banks this year to increase their holdings of U.S. dollar assets, including Treasuries, to prevent their currencies from appreciating and thus making exports more expensive relative to China’s, all the while blaming Beijing.
China Quashes Yuan Policy Speculation
Most expect that in Obama’s meetings at the Asia Pacific Economic Cooperation (APEC) summit and then in Beijing, China’s fixed-rate policy will likely be part of the discussion. On that note, investors are seeing a rising Yuan. Twelve-month non-deliverable forwards for the Yuan in Shanghai are signaling trader bets on a 3.5% gain from the spot rate of around 6.83.
However, in what seems to be an official effort by Chinese authorities to dismiss the renewed speculation of Yuan appreciation in the near term spurred by a recent language change from The People’s Bank of China, on Saturday, the state-controlled Chinese news agency Xinhua reportedly said that the government would not allow the currency to gain against the dollar in the short term. Goldman Sachs (GS) also just reiterated its three, six and 12-month forecasts for the Yuan to stay at 6.83 against the dollar.
China’s drive to create jobs and maintain social stability through export-led growth means politicians aren’t ready to loosen controls on the currency. In addition, China’s trade surplus will probably be half last year’s level at $200 billion, which means a bit less pressure on the Yuan to appreciate. The U.S. doesn’t want a stronger Yuan either because that would cause a collapse in the dollar in the short term.
Over time, China will likely be under pressure to open and let the Yuan appreciate in the next 24 months, and possibly as early as the 2nd half of 2010, albeit at a very gradual and modest pace, while most likely still pegged to the dollar. Eventually, the Yuan will appreciate considerably due to China’s high growth rate and its population’s high savings rate (35-50% range) .
On Nov 11, in Singapore, World Bank chief Zoellick calls the dollar's role as a reserve currency "relatively secure," but says over the next 10-15 years the Yuan (Renminbi) will provide an alternative once it is internationalized.....
In a speech a few days ago at a conference organized by the Monetary Authority of Singapore, International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn called on Asia to play a leading role in guiding the global economy to a new, more sustainable path for global growth.
The IMF expects Asia’s GDP growth, driven mostly by Chindia, to be 5.75% next year—almost double the 3% rate forecast for the global economy. Specifically, the IMF projects China annual growth to be 8.5% and 9% for 2009 and 2010 respectively.In contrast, advanced economies annual growth in 2010 is projected to be about 1.25% following a contraction of 3.5% in 2009.
static.seekingalpha.com/uploads/2009/11/16/...hina_growth.png" style="max-width:560px" />
China’s surging asset prices, a dollar collapse and a double-dip global recession are the biggest risks investors face in 2010. But many analysts are bullish on China for the long-term as 500 million educated and unemployed Chinese spur greater domestic spending and production.
Yet, Americans are estimated to have only 2% to 20% foreign stock exposure. That means Chinese stocks represent probably a low single-digit percentage, at most, in the average portfolio. With very few high investment return prospects, China is one market that should be given some serious consideration as part of a long portfolio........B-Shares ...ETFs...
seekingalpha.com/article/...awakened?source=article_sb_popular
For instance, South Korea’s won gained 8% against the Yuan in the past six months. Japan’s yen has risen 6%, while India’s rupee gained 6% and the Thai baht 4%. This has prompted Asian central banks this year to increase their holdings of U.S. dollar assets, including Treasuries, to prevent their currencies from appreciating and thus making exports more expensive relative to China’s, all the while blaming Beijing.
China Quashes Yuan Policy Speculation
Most expect that in Obama’s meetings at the Asia Pacific Economic Cooperation (APEC) summit and then in Beijing, China’s fixed-rate policy will likely be part of the discussion. On that note, investors are seeing a rising Yuan. Twelve-month non-deliverable forwards for the Yuan in Shanghai are signaling trader bets on a 3.5% gain from the spot rate of around 6.83.
However, in what seems to be an official effort by Chinese authorities to dismiss the renewed speculation of Yuan appreciation in the near term spurred by a recent language change from The People’s Bank of China, on Saturday, the state-controlled Chinese news agency Xinhua reportedly said that the government would not allow the currency to gain against the dollar in the short term. Goldman Sachs (GS) also just reiterated its three, six and 12-month forecasts for the Yuan to stay at 6.83 against the dollar.
China’s drive to create jobs and maintain social stability through export-led growth means politicians aren’t ready to loosen controls on the currency. In addition, China’s trade surplus will probably be half last year’s level at $200 billion, which means a bit less pressure on the Yuan to appreciate. The U.S. doesn’t want a stronger Yuan either because that would cause a collapse in the dollar in the short term.
Over time, China will likely be under pressure to open and let the Yuan appreciate in the next 24 months, and possibly as early as the 2nd half of 2010, albeit at a very gradual and modest pace, while most likely still pegged to the dollar. Eventually, the Yuan will appreciate considerably due to China’s high growth rate and its population’s high savings rate (35-50% range) .
On Nov 11, in Singapore, World Bank chief Zoellick calls the dollar's role as a reserve currency "relatively secure," but says over the next 10-15 years the Yuan (Renminbi) will provide an alternative once it is internationalized.....
In a speech a few days ago at a conference organized by the Monetary Authority of Singapore, International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn called on Asia to play a leading role in guiding the global economy to a new, more sustainable path for global growth.
The IMF expects Asia’s GDP growth, driven mostly by Chindia, to be 5.75% next year—almost double the 3% rate forecast for the global economy. Specifically, the IMF projects China annual growth to be 8.5% and 9% for 2009 and 2010 respectively.In contrast, advanced economies annual growth in 2010 is projected to be about 1.25% following a contraction of 3.5% in 2009.
China’s surging asset prices, a dollar collapse and a double-dip global recession are the biggest risks investors face in 2010. But many analysts are bullish on China for the long-term as 500 million educated and unemployed Chinese spur greater domestic spending and production.
Yet, Americans are estimated to have only 2% to 20% foreign stock exposure. That means Chinese stocks represent probably a low single-digit percentage, at most, in the average portfolio. With very few high investment return prospects, China is one market that should be given some serious consideration as part of a long portfolio........B-Shares ...ETFs...
seekingalpha.com/article/...awakened?source=article_sb_popular
