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Strategies & Market Trends : John Pitera's Market Laboratory
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To: John Pitera who wrote (7712)3/20/2007 6:21:18 PM
From: Hawkmoon  Read Replies (1) of 33421
 
Yeah John.. I saw that yesterday and was thinking the same thing? But then we see that your second article stated they believe he may have been misquoted:

But analysts said People's Bank of China Governor Zhou Xiaochuan might have been misquoted, since China's $1 trillion stash of reserves will keep growing as long as its central bank keeps buying dollars to keep the yuan from appreciating, a practice it has shown no sign of abandoning any time soon.

However, I think, IMO, some signals are being sent back and forth between CBs and governments. We've pressured the Chinese hard about the value of the Yuan.. So for them to make such a statement about "abandoning" dollar accumulation during a period when the US market is unsteady, is a little jab in our ribs.

However, at least with the Chinese, the threat is far more credible than it is with the Japanese. China's government could afford to sacrifice a few percentage points of economic growth to permit their Yuan to appreciate. In fact, it appears they need to do this in the face of inflationary pressures. But the Japanese cannot afford to have the Yen increase in value until they've restored economic growth.

Was trying to find the link to an article I very recently read (this morning?) about how China was facing difficulties in translating it vast foreign reserves into Yuan based reserves that it could use to firm up its banking systems and support a domestic mortgage market. If I find it again, I'll post it.

Hawk
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