Watch What China Does, Not What It Says About Yuan-Dollar Rate

Pay less notice to China’s 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 [...]

Oiling The Decline Of The Dollar As The World’s Reserve Currency

More on the dollar and its growing role as the fault line of the China-U.S. relationship: China, Russia, Brazil, France and the Gulf States are plotting to switch global oil trading out of dollars, according to Robert Fisk writing in The Independent. Instead they would price oil against a basket of currencies and gold. Secret meetings of [...]

The Dollar And The Yuan, Not A Turkish Delight

The finance ministers’ meetings in Istanbul over the weekend revealed a deep crack in the veneer of harmony over the global financial crisis that the world’s leading economies have been seeking to present to the world. Ministers from the seven largest rich nations urged China to take steps to strengthen the yuan, a move Beijing [...]

China, Having Slowed Yuan’s Appreciation, Takes Foot Off Brake

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 [...]

China To U.S.: Look After Our U.S. Investments. Unsaid: Or Else?

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 [...]

Dollar-Bound

Even with a slowing economy and export markets slowing faster, China has a lot of trade surplus dollars to recycle. Its foreign-exchange reserves are in excess of $1 trillion and they sit mostly in U.S. dollar-denominated assets.
The American currency depreciated steadily for the past four years, though it has rallied recently. This may be a [...]