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To: Skeeter Bug who wrote (36315)	1/24/1999 4:20:00 AM
From: Bill Harmond	Read Replies (3) \| Respond to of 164684

>>china WILL devalue. only question is WHEN. Then buy US Treasury bonds on 10% margin and start stocking canned goods.

To: Skeeter Bug who wrote (36315)	1/24/1999 12:17:00 PM
From: 16yearcycle	Read Replies (4) \| Respond to of 164684

China Again Moves to Ease Fears About a Devaluation SHANGHAI -- With new worries coursing through global currency markets this week, China's leaders stepped to the forefront to repeat the vows that they had frequently made last year: The yuan won't be devalued in 1999. Statements to that effect came from three powerful parts of the central government this week -- the central bank, the Ministry of Foreign Affairs and the State Administration of Foreign Exchange. All three said that a devaluation isn't in the cards this year because it isn't in China's interests. As if on cue, China's yuan responded, strengthening on the last trading day of the week in a display of stability. The Chinese currency finished Friday at 8.2788 yuan to the dollar, compared with 8.2800 yuan to the dollar on Thursday. Trading, though, was dull, valued at less than $150 million. The rebound offered scant reassurance to world financial markets, which remain worried that the continued troubles in Brazil -- and the renewed slide in the Brazilian real -- will be followed by greater woes in China, where troubles at investment companies has been getting greater attention. Many investors fear that the yuan will be the next currency to be devalued. The real weakened significantly on Thursday, and briefly extended that slide early Friday before stabilizing in morning trading. Brasilia backed away from its longstanding vow to avoid a devaluation of the real last Friday, allowing it to float freely in the foreign-exchange market. A State Administration of Foreign Exchange official on Friday became the latest official to attempt to quash speculation about the yuan. "A yuan devaluation in 1999 has been ruled out at the top level of government," said the official on condition of anonymity. "There hasn't been, and won't be, any change in our stable yuan policy," the official said. China's yuan is seen as a key link in preventing another round of global financial turmoil. A yuan devaluation, many traders and economists say, would spark new devaluations around Asia and could possible fuel instability in some developed economies. Traders and analysts in China, meanwhile, say they don't see any fundamental reason for China to devalue. Further, they says the currency's value will remain supported by China's swelling trade surplus, which hit $43 billion last year and is still growing. The yuan is also supported by the $145 billion in hard reserves that the central bank holds. Indeed, one trader and State Administration of Foreign Exchange official noted that the government can maintain a strong hold over the value of the yuan. China's yuan is convertible under the current, or trade account only, meaning speculators can't attack the currency. It also means the unit isn't affected by large, rapid capital movements, and that a weaker yuan could be engineered only by the government and not market forces. Return to top of page \| Format for printing Copyright © 1999 Dow Jones & Company, Inc. All Rights Reserved.