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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (14838)	11/4/2004 1:40:15 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

China tries to counter currency speculators By Malcolm Moore in London November 4, 2004 Page Tools Email to a friend Printer format China is to crack down on speculative foreign exchange trading to maintain its economic stability. The country's foreign exchange regulator made the announcement yesterday to try to deter speculators from betting on a revaluation of its currency, the yuan, following last week's 0.26 per cent rise in interest rates. China has a closed currency market, with the yuan pegged to the US dollar, but the State Administration of Foreign Exchange said there had been illegal foreign exchange settlements by some banks and companies. Huge amounts of foreign investment have boosted the amount of money in circulation in China this year, undermining the government's attempts to curb inflation by limiting bank lending. Because of the fixed foreign exchange system, funds arriving in China have to be converted into yuan. Paul Lambert, head of currencies at Deutsche Asset Management, said: "People have not paid much attention [to the announcement] because they are not sure if the guy who is speaking has any authority." He said if China wanted to tighten its control over foreign exchange inflows, it could impose additional bureaucratic rules on traders. The regulator said China had a $US66.8 billion ($90 billion) surplus on its closed capital account, which measures the transfer of funds in and out of the country, and a $US7.5 billion surplus on its current account. Several economists believe the Chinese economy is in danger of overheating after gross domestic product grew by a claimed 9.5 per cent in the first nine months of this year. China expects growth to slow to 8 to 8.5 per cent next year in a "soft landing". Andy Xie, an economist with Morgan Stanley in the region, said the probability of a soft landing was slim. "Can we avoid a hard landing? It is possible, but I think it's going to be difficult," he said. "You are trying to stop people investing when they think they can make a lot of money." Wal-Mart, the world's biggest shopkeeper, said on Tuesday it would open at least 10 new stores in China next year. French retailer Carrefour is the foreign retailer with the largest slice of China's £134 billion ($328 billion) retail market. The Telegraph, London smh.com.au