Tuesday, May 10, 2005

Update on China's Peg to US Dollar

In today's MarketWatch morning email - Before the Bell:
"Investors waiting for China to loosen its renminbi yuan's peg to the dollar got a hint Tuesday that such a move might not be forthcoming, when a Chinese government bureau warned of the consequences of such a move. China's National Bureau of Statistics said that a 15% appreciation of the yuan "would turn China's export growth negative this year," according to a research report posted on the bureau's Web site, AFX-Asia reported. The bureau forecast that a more moderate revaluation of 3.0% to 5.0% would lead to export growth falling this year to less than 10.0%, compared with last year's growth of 35.4%. "
The importance of this speaks to those worried about encroaching Chinese imports and to those worried about the amount of US Securities held by foreign investors, particularly Asian central banks and especially China. I am not worried about either but watch developments closely.

MarketWatch is a great free service for all types of financial and business research. A free subscription to Before the Bell is available here.

No comments: