Central Bank Tightens Policy A Notch, But What Is It Saying About The Yuan?

Pay less notice to the latest monthly industrial production and retail sales figures — both up 16% in October from a year before, with the trade surplus almost doubling from September, to $24 billion, as the contraction in exports eased to its slowest pace this year — and more to the subsequent statement by the [...]

A Call For U.S. To Issue Yuan-Denominated Bonds

The call by Guo Shuqing, chairman of state-controlled China Construction Bank, for the U.S. to issue yuan-denominated bonds can be interpreted two ways. One reading suggests this is another sign of Chinese nervousness about the risk of a plunging dollar further devaluing China’s extensive and already dinged dollar-denominated assets. An alternative view is that this [...]

What Was Really Behind The Yuan’s Rise

With Hillary Clinton now in Beijing and the value of the yuan against the dollar an inevitable agenda item in her discussions with her hosts, a newly published working paper from the National Bureau of Economic Research throws new light on the yuan’s rise against dollar since the peg with the dollar was loosened a [...]

China Tells New U.S. Administration To Step Lightly

His welcome-to-your-new-job call was cordial and formulaic enough, but in his published remarks, foreign minister Yang Jiechi was more forthright towards his new American counterpart, Hillary Clinton, telling her to be careful with sensitive issues that could strain ties between the two nations.
Yang didn’t mention the yuan issue by name (and that isn’t really [...]

Yuan’s Recent Weakness Done

The yuan’s recent little run of depreciation against the dollar seems to be done. Last week, the central bank allowed the biggest decline in China’s currency since ending its fixed exchange rate against the dollar in 2005. That confirmed a view forming since October among investors that Beijing was weakening the currency to help the [...]

Wang Tells Paulson That The U.S. Has To Look After China’s Interests There

A curious turn of phrase from Vice-Premier Wang Qishan during his opening speech at the latest bilateral strategic economic talks with his American counterpart U.S. Treasury Secretary Hank Paulson:
”I hope the United States will take all necessary measures to stabilize its economy and financial markets as soon as possible and to ensure the security of [...]

Yuan Ceases To Strengthen

The yuan’s appreciation seems to have gone into reverse. Its managed rise against the dollar since it was unpegged in July 2005 ceased in September as the global slowdown started to affect China. As those effects intensified, and exporters were hit hard, the yuan has weakened again. There may be technical reasons as investors shun [...]

Two More Chinese Firms Reveal Forex Losses

Misery loves company. China Railway and China Railway Construction have joined Citic Pacific in revealing disastrous bets on foreign-exchange.
China Railway booked a $285 million loss and China Railway Construction booked a $45 million loss on forex operations in the first nine months of the year and in the third quarter respectively, Bloomberg reports. That combined [...]

Hot Money Stops Flooding Into China

One unintended benefit for the economy from the global financial crisis is that the flow of hot money into China has slowed to a crawl or less.
The latest quarterly figures from the central bank show foreign exchange reserves rising to $1.9 trillion at the end of September, up from $1.8 trillion at the end of [...]

Yuan Rises Through Symbolic Dollar Level

The People’s Bank of China fixed the yuan’s reference rate at 6.9920 today, the first time the currency has broken above the seven to the U.S. dollar level since 1994. It came a few days after U.S. Treasury Secretary Hank Paulson’s visit, but if the two had coincided it might, in retrospect, have looked a [...]