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China-Japan-Koreas
Fed's Lower Rates Pressure China to Strengthen Yuan
2008-02-18
We've discussed the situation with China's and in general Asian, currencies in the past. Here's a piece from Bloomberg that provides some background and thoughts on how the fall in the dollar has played out in the East.
Feb. 18 (Bloomberg) -- Like it or not, China has no choice other than to let the yuan appreciate against the dollar. The combination of the world's fastest economic growth, the highest inflation rate in 11 years and the rising cost of intervention will force gains in the yuan to accelerate, even as policy makers in Beijing resist calls from the West to let the currency appreciate at a faster pace, say Pacific Investment Management Co. and Pictet & Cie., Switzerland's largest closely held private bank.

Central bankers in Thailand, Malaysia, Singapore and the Philippines are in the same situation, making their currencies attractive, according to money managers at the firms and Merrill Lynch & Co. Nine of the 10 best-performing currencies against the dollar in 2008 will come from Asia, surveys of foreign exchange strategists by Bloomberg show.

``You're likely to see less intervention,'' said Ramin Toloui, who helps oversee more than $60 billion in emerging- market bonds and currencies at Newport Beach, California-based Pimco. ``Several Asian central banks see more rapid exchange- rate appreciation as an important tool to fight inflation.''

After rising 7 percent last year, the yuan has appreciated 1.9 percent to 7.1679 per dollar so far in 2008. New York-based JPMorgan Chase & Co., the largest U.S. bank by market value, predicts a further 14 percent increase, while Citigroup Inc. in New York, the second largest, forecasts a 6 percent advance.

Thailand's baht has climbed 3.7 percent to 32.51 this year, while the Taiwan dollar is up 2.4 percent to NT$31.71. Malaysia's ringgit and Singapore dollar are close to their highest levels in a decade.
Posted by:Steve White

#2  Talked about this here.
Posted by: OregonGuy   2008-02-18 16:45  

#1  STRATEGYPAGE > BACK TO BLACK. China's desire of TECH INNOVATION = making it FDI profitable for foreign entrpeneurs and companies, while flooding Western schools with Chinese students, plus the old-fahioned, Cold War dirty stuff.
Posted by: JosephMendiola   2008-02-18 01:08  

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