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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: RJA_ who wrote (60648)	2/6/2010 3:51:30 AM
From: elmatador	Respond to of 217885

It's the Yuan that emboldened the US: China to Prevent Yuan From Strengthening This Year, Fukoku Says. After getting no response from China, US lost patience and no it is throwing everything it has to the Chinese. -Google pull out. -Hillary complains -Selling wepaons to Taiwan. -Visit the Dalai Lama China to Prevent Yuan From Strengthening This Year, Fukoku Says By Yasuhiko Seki and Nobuyuki Akama Feb. 5 (Bloomberg) -- China is likely to prevent its currency from strengthening against the dollar this year to help its exporters weather the weakness in global demand, according to Fukoku Capital Management Inc. China’s policy makers have limited gains in the yuan since July 2008 as the world economy suffered its deepest downturn since World War II, after allowing the currency to rise 21 percent over the previous three years. U.S. Treasury Secretary Timothy F. Geithner said yesterday Chinese officials realize a more flexible exchange rate is in their economy’s best interest, and he indicated such a shift is “likely.” “The Chinese economy may struggle to sustain robust growth without government stimulus measures,” said Yuuki Sakurai, chief executive officer in Tokyo at Fukoku Capital, a unit of one of Japan’s 10 largest life insurers. “Given the adverse impact of a stronger yuan on the nation’s exports and economic recovery, the chance of the government letting the yuan rise this year looks slim.” China’s consumer prices rose 1.9 percent in December, the fastest pace in a year, and gross domestic product climbed 10.7 percent in the fourth quarter, fueling speculation the nation’s authorities will allow the yuan to strengthen to damp economic growth and reduce the risk of asset bubbles. International Pressure China may let the currency resume its appreciation as early as March to help curb inflation as exports rebound and international pressure for it to strengthen builds, Zhang Ming, deputy chief of the International Finance Research Center at the Chinese Academy of Social Sciences, wrote in the China Securities Journal this week. “China hasn’t yet reached a stage where it needs to be worried about asset-price bubbles,” Sakurai said. “It will be a slow process before policy makers can actually hike interest rates and revalue the yuan.” Brokerages pared bets this week on how much the yuan is likely to appreciate in the next 12 months. Twelve-month non-deliverable yuan forwards dropped 0.6 percent from Jan. 29 to 6.6670 per dollar, the biggest decline since the period ended Dec. 11, according to data compiled by Bloomberg. The contracts indicate traders see the currency rising 2.4 percent in a year from the current spot rate of 6.8273. Sakurai also said he sees only a limited chance the U.S. Federal Reserve will make an early end to its policy of flooding the economy with cash because of concern the global economic recovery is waning. Prospects ‘Hazy’ “With prospects for the global economy in 2011 still hazy and U.S. housing markets still far from clearly bottoming out, the Fed can’t possibly increase interest rates this year,” Sakurai said. U.S. policy makers will raise their benchmark interest rate to 0.5 percent in the third quarter of this year, from the current range of between zero and 0.25 percent, according to a Bloomberg News survey of economists. “Given the risk the global economy will fail to gather strong momentum going forward, which will also hamper the outlook for stocks, there is no other choice but to buy government bonds,” Sakurai said. Japan’s 10-year yields may fall to as low as 1.20 percent in the first half of this year, from their current level of 1.355 percent, Sakurai said. Japanese government bonds have provided investors a return of 2.7 percent this year in dollar terms, beating the 1.6 percent gain from Treasuries and the 2.4 percent loss for German bunds, according to indexes from Bank of America Corp.’s Merrill Lynch unit. To contact the reporters on this story: Yasuhiko Seki in Tokyo at Yseki5@bloomberg.net; Nobuyuki Akama in Tokyo at akama@bloomberg.net.