Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (30447)	4/30/2005 9:46:38 PM
From: Les H	Respond to of 306849

Chinese Checkers.......... The buck is lower against most major currencies as rumors/worries over a Yuan/Renminbi revaluation fuel Far Eastern currency gains. The US dollar index is down .41 at 83.94. US bonds are lower with the benchmark 10 yr Treasury bond yielding 4.20%. Equities worldwide are up about .5% after Wall Street's late day destruction. The CRB was lower by 1.48 at 304.40, gold is higher by $2 at $433.40, and oil is down .45c at $51.39. The foreign exchange markets are getting whipped up by the constant intrigue of will they/won't they Chinese revaluation/float. Last night, China's state-run China Securities Journal (CSJ) fanned new talk of an imminent revaluation by saying that deepening reforms of commercial banks and the foreign exchange market have created conditions for the country to adjust the yuan according to Reuters. Most of the floating Far Eastern currencies strengthened on the news with the US dollar dropping to a low around 105.00 ag the Yen (Japanese currency appreciating as a proxy for the Yuan). The Yuan or Renminbi is allowed to trade in a band of 8.2760-8.2800 ever since the 1997/1998 Asian crisis. Last night after this story, the yuan spiked to a 8.2700 high before settling back into its band. Some investment bank economists have said they expect the peg to be loosened as early as next week. The CSJ article follows up several weeks of commentary from Greenspan, Snow, and Bush that have all urged China to make the yuan more flexible and have stated that they believe that China has already established the financial infrastructure to do so. The last part has been the big shift in the US approach to China. This was pushed by people like New York Democrat Charles Schumer who has claimed that China is keeping the yuan artificially low and threatened to slap tariffs on their exports to the US should they persist. And that came after the flood of textile/apparel imports that hit the US after January 1st and came on top of the US trade deficit ballooning to a record $61 billion a month. So here's how the game works now. Every Thursday and Friday, the currency markets get nervous about the potential of a weekend revaluation. (Explainer: Why it's going to occur always over a weekend, I'm not sure, but that's the way the market thinks it's going to happen. It probably has to do with the idea that the Chinese will need to adjust everything when the markets are closed.) Therefore, the market begins to buy Far Eastern currencies against the dollar and against low interest rate European currencies on those days. Then after the weekend is over and nothing happens, they sell out of those positions. This has happened the last two weeks in a row after the Bush administration changed its tune on China. Expect this game to continue.....