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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (2748)	3/10/2004 4:34:35 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

Much to do about nothing<g>-S&P says China drew $40-50 bln hot money in 2003 Reuters, 03.10.04, 1:04 AM ET KUALA LUMPUR, March 10 (Reuters) - China pulled in $40 billion to $50 billion of hot money in 2003, partly due to expectations of a revaluation of the yuan, international ratings agency Standard & Poor's said on Wednesday. Speculation has grown that China might be considering widening the yuan's wafer-thin trading band or re-pegging it to a basket of currencies to deflect U.S. pressure for a revaluation. "The hot money in China last year alone could be up to $40-50 billion and some of that could easily flow out if an appreciation does happen," S&P Sovereign and International Public Finance Ratings director Ping Chew told a briefing. China's foreign exchange reserves, the second largest in the world, stood at $415.7 billion in January, up $12.5 billion on a month earlier. Booming exports are pushing up the reserves, but analysts say that short-term investment, "hot money", is another reason for the rise, as speculators seek yuan-denominated assets that would appreciate if the currency were revalued. The yuan, pegged within a narrow range at about 8.3 per dollar since the mid-1990s, has been blamed by some U.S. politicians for the loss of American manufacturing jobs by making China's exports artificially cheap. China has resisted foreign pressure to revalue but has promised more flexibility for its currency in time. On Wednesday foreign exchange chief Guo Shuqing was quoted as saying that China's efforts to reform the rigid exchange rate regime would not necessarily mean a revaluation. S&P said in September a flotation of the yuan, also called the renminbi, could damage the country's debt rating. "We think that if they do move, they could move into a peg against a basket of currencies," Chew said. Copyright 2004, Reuters News Service forbes.com