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To: Haim R. Branisteanu who wrote (36155)	7/16/2003 9:25:27 PM
From: Ramsey Su	Read Replies (2) \| Respond to of 74559

How come no one ever complains about a bunch of countries that are all pegged together in the form of Euros?

To: Haim R. Branisteanu who wrote (36155)	7/17/2003 9:07:55 AM
From: TobagoJack	Read Replies (2) \| Respond to of 74559

Hello Haim, <<your take on BubbleBoy comments today about the China peg>> I had heard some disturbing rumors a week ago Message 19088242 <<July 6th, 2003>> on Chinese RMB revaluation against the USD and the HK$ devaluation against the USD. I am mentally steeling myself against both possibilities. As to what Greensputin said, I take it simply as another bit of noise of US officialdom, and nothing more. Revaluation of RMB may happen, but I am fairly sure it will devalue yet again, because China's need to print money is simply greater than the US need to do same. What Greensputin had to say is true, up to a point, but like all that he says, they are true only up to a point, after which then false. Greenspan's fiat printing can also be said to be unsustainable, for the same exact reasons, thus leaving us with a "so what?". Greensputin said ... news.ft.com Greenspan warns China on currency peg By Alan Beattie in Washington and Christopher Swann in London Published: July 16 2003 20:22 \| Last Updated: July 16 2003 20:22 Alan Greenspan, chairman of the US Federal Reserve, on Wednesday warned that the Chinese authorities could not continue to peg their currency without endangering their domestic economy. The comments, in front of a congressional committee, add to a chorus of concern among policymakers about China's insistence on fixing the renminbi against the dollar. Mr Greenspan suggested that the renminbi would have to be allowed to float, saying the current campaign of intervention to support it was unsustainable. "It has required them to. . . be very heavy purchasers of US dollar-denominated assets," Mr Greenspan said. "At some point they will no longer be able to do that, because it will create an inability of their monetary system to function well." Asked directly if the authorities should let the renminbi float, Mr Greenspan said: "I think that from an economic point of view, it's going to be increasingly evident that that is what is going to have to happen if the existing cost structures around the world remain as they are. And I think the Chinese are sufficiently sophisticated to understand that." Inflows of "hot money" into China have recently forced the central bank to buy an average of $600m (£422m) a day to keep the currency steady against the dollar. This pushed China's foreign exchange reserves above $340bn by the end of June from $316bn at the end of March. The surge is viewed by many as evidence of the undervaluation of the currency. Mr Greenspan noted that John Snow, the US Treasury secretary, had already advised the Chinese authorities that they should float their currency. The Fed chairman's words are part of an increased willingness among American policymakers publicly to discuss floating the renminbi. Though they have generally avoided directly pressing China on the issue - believing that it might be counter-productive - US officials have praised moves towards greater flexibility in the Chinese exchange rate. Mr Greenspan on Wednesday questioned whether public pressure on the Chinese would actually help move their private discussion along. The US administration is also under pressure from the US business lobby, particularly manufacturing, which says that Asian currency manipulation is costing American jobs. China's trade surplus with the US grew from $28.2bn in 2001 to $43.3bn in 2002. Commenting on the US economy, Mr Greenspan sought to correct a false impression that he had completely ruled out the use of unusual measures such as buying Treasury bonds outright to combat deflation. Bond yields rose sharply on Tuesday after Mr Greenspan said that such measures were most unlikely to be needed. The Fed chairman said it was not clear whether resurrecting the 30-year Treasury bond, which was discontinued in 2001, was a good idea even in view of the mounting deficits faced by the US.