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China Will Expand Cross-Border Yuan(0)The government will push for further opening of its financial markets to increase channels for overseas investors to obtain and use the Chinese currency, the People?s Bank of China said in a report. It will also look at setting up exchange-rate mechanisms between the yuan and some ?minor? currencies on China?s interbank market, the report said.Since 1993, China?s central bank has signed agreements with Vietnam, Mongolia, Russia, Kyrgyzstan, Laos, North Korea, Nepal and Kazakhstan about using local currencies in bilateral trade, according to the report. The PBOC has also permitted six local lenders to finance overseas projects in yuan since November, it said.China started to allow businesses to use yuan in cross-border trade in July 2009. In the past two months, China has started yuan spot trading versus Malaysia?s ringgit, allowed offshore trading of the currency in Hong Kong and announced the opening of its bond market to foreign banks.
Source : Konaxis
China Yuan Reform(0)China’s trading partners are anxious for Beijing to spell out how quickly it will let the yuan rise after it said on Saturday that it was ending the currency’s 23-month-old peg to the dollar.
Some leaders at this weekend’s Group of 20 summit in Toronto might even want China to produce a schedule of sorts, Canadian Finance Minister Jim Flaherty said on Monday.
But Foreign Ministry spokesman Qin Gang said Beijing would act as it saw fit and would not be rushed.
Qin did not give a direct answer when asked whether President Hu Jintao would discuss the yuan in Toronto, but he noted that previous G20 summits had not singled out individual currencies.
Source : Konaxis
Yuan appreciation(0)SAFE also said it expected a smaller current account surplus this year as a percentage of GDP but a larger overall balance of payments surplus. The currency regulator made the comments in a report accompanying revised balance-of-payments data for 2009.
“The relatively higher domestic interest rate and mounting expectations for yuan appreciation will increase the scale of cross-border carry trade,” the report said.
The currency regulator said the situation of China’s international balance of payments is improving due to an expected narrowing of its trade surplus and a quicker pace in outbound investments.
SAFE revised the 2009 current account surplus to $297.1 billion from the $284.1 billion figure issued earlier this year, while the capital and financial account surplus was also revised up to $144.8 billion from $109.1 billion.
Source : Konaxis
Geithner Heads To China(0)The last-minute visit comes just days before Chinese President Hu Jintao heads to Washington for an international summit on nuclear security – suggesting the two countries are getting their relationship back on track.
Mr Geithner arrived late on Wednesday in Hong Kong, where he was to spend the night, before heading to Beijing on Thursday.
He will hold talks with Vice Premier Wang Qishan, who is in charge of economic and financial issues. Wang heads the Chinese side for the Strategic and Economic Dialogue with the US, the next round of which takes place in May.
‘This is a visit that we just confirmed yesterday,’ Richard Buangan, a spokesman for the US embassy in the Chinese capital, told AFP on Wednesday, adding the talks would be closed to the media.
In New Delhi, where Mr Geithner was wrapping up a visit to India, his spokesman Andrew Williams said the US Treasury secretary and Mr Wang had been ‘working together to find an opportunity to meet in person for some time’. Neither US official would comment on the agenda for the talks.
Source : Konaxis
Yuan Trading Against Ruble(0)The People?s Bank of China is investigating the possibility of offering new foreign-exchange pairs, said an official at the Shanghai-based interbank exchange, a subsidiary of the central bank. He asked not to be identified as authorities have yet to make a final decision. Traders now can buy or sell the yuan against the dollar, the euro, the Japanese yen, the Hong Kong dollar and the British pound.
China is seeking greater use of the yuan to reduce reliance on the U.S. dollar after Premier Wen Jiabao said last month he is ?worried? about holdings of assets denominated in the greenback. From July, the government started allowing companies in Shanghai and four cities in the southern province of Guangdong to use yuan in cross-border trade with Hong Kong, Macau and members of the Association of Southeast Asian Nations.
Since December 2008, China has set up 650 billion yuan worth of swap agreements with Indonesia, Malaysia, South Korea, Hong Kong, Belarus and Argentina, broadening access to the yuan. The central bank has also proposed expanding the use of International Monetary Fund depository receipts in reserves instead of dollars.
Source : Konaxis
Falling yuan and dollar worry Europe(0)For several weeks euro kept on rising, while both the dollar and the yuan have fallen.
Eurogroup chief Jean-Claude Juncker said he, European Central Bank boss Jean-Claude Trichet and EU economic and monetary affairs commissioner Joaquin Almunia would now turn their sights on Beijing before the year is out.
“It is foreseen that the three of us will travel to China before the end of this year and discuss the exchange rate policy,” said Juncker, without giving any detail as to what message they would carry.
In New York, the dollar again traded lower late Monday, the euro rising to 1.4958 dollars at 2100 GMT from 1.4903 dollars late in New York on Friday.
The European Commission reckons that appreciation in euro value against the dollar of 10 percent in real terms would see exports fall by around 2.5 percent within two years.
Source : Konaxis
Yuan stability top monetary goal(0)China must stick to a moderately loose monetary stance, use policy tools flexibly and control inflation to keep the yuan stable, Zhou said Wednesday.
China has stalled the yuan?s appreciation against the dollar since July last year to protecting exporters.
Monetary policy needs to be continuously adjusted in relation to the nation?s economic development, employment, currency stability and the international balance of payments, Zhou said. Developing nations such as China can accept inflation of more than 2 percent, a higher rate than developed countries generally hope for, he added.
Since 2005, the flexibility of the exchange rate has increased notably, Zhou said. The currency has been kept basically stable, he added.
The yuan may gain 24 percent to 5.5 per dollar by 2015 as China?s overseas sales will pick up in 2010 and the U.S. will push for appreciation, Standard Chartered Plc. wrote in a Sept. 18 note.
Source : Konaxis
Cross-border yuan settlement(0)The first cross-border yuan trade settlement was announced by the Bank of China (BOC), China’s largest foreign exchange bank, to have been completed on Monday, July 6.
The payee was Shanghai Electric International Economic and Trading Co. Ltd., a subsidiary company of Shanghai Electric Group Co. Ltd., and the remitter was the company’s business partner in Hong Kong, said the Beijing-based BOC in a statement on its Web site Monday.
However, there was no indication of the amount involved in the settlement.
Li Lihui, president of the BOC, said at the ceremony of the first cross-border yuan trade settlement held in Shanghai that the deal could facilitate trade between China and neighboring countries and regions and help enterprises avoid exchange rate risks.
“Cross-border yuan trade settlement could help firms simplify trading procedures and reduce operation costs. It could also help banks to expand business scope, improve service, and forge stronger ties with enterprises,” Li added.
Under the supplementary memorandum of cooperation signed by the Monetary Authority and the People’s Bank of China, Hong Kong businesses can settle trade transactions in yuan with selected businesses in Shanghai, Guangdong, Zhuhai, Shenzhen and Dongguan.
“Using yuan to settle trade transactions can help expand yuan business locally, facilitate the yuan’s liquidity and create the right condition for Hong Kong to develop into a yuan-clearing center,” Chief Executive Donald Tsang said.
A memorandum of understanding on expanding the yuan business in Hong Kong was signed in 2003.
Source : Konaxis
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