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

To: RealMuLan who wrote (4790)	5/9/2005 8:30:16 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

China defies speculators, leaves yuan unchanged; NDF discount narrows Monday, May 9, 2005 11:09:00 AM afxpress.com HONG KONG (AFX) - China did not adjust its currency over the lengthy "golden week" holiday, confounding speculators and narrowing the discount on the yuan's non-deliverable forwards The one-year NDF discount to the spot rate on the yuan fell back to a median rate of 4,750 points against 4,950 early last week though that was still up from 4,650 on April 29. The current rate implies a yuan rate of 7.8015 to the dollar one year from now The discount on the one-month contract narrowed to 680 points from 1,050 shortly before the holiday and 220 in early April. Speculators had been looking for China to revalue over the week-long May holiday even though Beijing had signalled it was holding its currency firm. The yuan has been effectively pegged at around 8.28 to the dollar since 1994 China has said it wants to make the exchange rate mechanism more flexible but it has not given any hints about the timing Comments by US President George Bush and Federal Reserve chief Alan Greenspan, calling for China to take action on the currency, probably added to the speculative pressure ahead of the holiday. Andrew Fung, head of sales for Greater China treasury and markets at DBS Bank, said that rising speculation at the end of April, coupled with aggressive calls on the timing of a revaluation from investment banks, has seen the focus shift to the one-month contract from the traditionally more liquid one year That was particularly true just before the week-long holiday, dealers said Fung said that attention moved to the shorter end of the curve after the one-year contract failed to break the 5,000 point discount barrier in the run up to and during the holiday ?he one year hasn? been in focus because 5,000 points is a very strong barrier,? he said. ?ince the end of April the one-month has hit a historical high. The focus is on the timing.? jc/wk For more information and to contact AFX: www.afxnews.com and www.afxpress.com futures.fxstreet.com