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Tennis Season

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The game's definitely heating up on centre court...


The event, held in a cavernous room bathed in red light at the Metro Toronto Convention Centre last week, served to introduce a transaction clearing bank for the Chinese currency less than 500 miles from Wall Street. The new trading hub will allow companies for the first time to settle accounts with Chinese partners during local business hours in the $5.3 trillion dollar-a-day currency market.


The last time the yuan was up for consideration, in 2010, it was rejected because the IMF said the tightly controlled currency was not freely usable.

Canadas clearing bank could help there. Its the latest of 10 appointed in the last year by the Peoples Bank of China, which has established outposts from London to Sydney to boost yuan use abroad.


In 2009, Chinese central bank Governor Zhou Xiaochuan called for using IMF special drawing rights as a reserve alternative. When then-U.S. Treasury Secretary Timothy Geithner said the U.S. was open to the idea two days later, the dollar slid as much as 1.3 percent against the euro within 10 minutes. It bounced back up when Geithner predicted no change in the U.S. currencys role.


Chinese policy makers will do whatever it takes to ensure a stable exchange rate before the International Monetary Fund starts discussing the possibility of adding the yuan to the ranks of the worlds reserve currencies in May, according to Barclays Plc and DBS Group Holdings. Theyve already been tapping their almost $4 trillion in foreign reserves to do this, spending an estimated $33 billion in the first quarter to halt a slump that had sent the yuan to a two-year low in March.


The monetary authority is dipping into its foreign reserves to offset capital outflows and stabilize the yuan. Economists surveyed by Bloomberg estimate that the stockpile declined $33 billion in the first quarter, extending the drop since June to $183 billion.


When opening the capital account you need to make sure the economy is strong enough to handle the fund flows out, Bernanke said. An open account is a two-edged sword and a drop in the currency could cause panic and an exodus of money, he said.


An unusual confluence of circumstances means the seventh annual U.S.-China Strategic and Economic Dialogue, taking place Tuesday and Wednesday in Washington, has the potential to give crucial momentum to Chinas opening of its financial system and loosening of currency controls.


Defense Secretary Ashton Carter last month called on China to halt its land reclamation efforts in the disputed waters of the South China Sea and vowed that U.S. warships and military aircraft would ignore Chinese objections to their operations in the area.


Meanwhile, the Obama administration is considering possible retaliation for a computer hack of government files at the Office of Personnel Management. Data on as many as 14 million individuals may have been stolen, according to a lawmaker who asked not to be identified while discussing ongoing investigations. U.S. officials privately blame the attack on the Chinese government, allegations that the Chinese Embassy in Washington denies.


The U.S. has 17 percent of votes in the IMFs executive board and Treasury Secretary Jacob J. Lew said the real test will be what China does when theres pressure on its currency to strengthen.


China is committed to increasing exchange-rate flexibility and moving more rapidly toward a market-oriented system, the U.S. Treasury Department said in a statement on Thursday. China pledged for the first time to intervene in foreign-exchange markets only when necessitated by disorderly market conditions, it said.


Chinas stocks rout will probably lead to a more gradual easing of its capital controls, hampering the yuans bid for reserve-currency status, according to Nomura Holdings Inc.


The Shanghai Composite Index of shares has tumbled 29 percent from its peak in June and government efforts to stem the slide, including stock purchases by state-run financial firms and a halt to initial public offerings, have yet to restore confidence. Foreigners sales of mainland shares through a Shanghai-Hong Kong exchange link climbed to an all-time high on Monday.


Chinese companies have found a guaranteed way to prevent investors from selling their shares: suspend trading.

Almost 200 stocks halted trading after the close on Monday, bringing the total number of suspensions to 745, or 26 percent of listed firms on mainland exchanges, according to data compiled by Bloomberg. Most of the halts are by companies listed in Shenzhen, which is dominated by smaller businesses.

The suspensions have locked up $1.4 trillion of shares, or 21 percent of Chinas market capitalization, and are becoming increasingly popular as equity prices tumble. If not for the halts, a 28 percent plunge in the Shanghai Composite Index from its June 12 peak would probably be even deeper.

Their main objective is to prevent share prices from slumping further amid a selling stampede, said Chen Jiahe, a strategist at Cinda Securities Co

Advantage Paulson/ Bernanke I'd say... but what would I know, right?

Edited by ParticleMan

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Deutsche Bank’s Alan Ruskin has written a note... Here’s his conclusion...
The PBOC is already much more stretched than the Fed ever was. They are struggling with “the holy trinity”—maintaining a currency peg for stability, interestrates and [reserve requirement ratio] directed at the real economy, equity support, and all this while attempting to liberalize interest rates and open the capital account while maintaining fiscal discipline. It’s a tall ask. It would suggest that some objectives like the internationalization of the Rmb be deferred.

Where's that popcorn.

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it sounds like a racket.

What a load of balls.

listening to ladies tennis is one of my favourite pastimes.

you just have to envision the rest, it's much more fun :D

one of the few times being short sighted would have its benefits.

Edited by oracle

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Hat-tip to northshore...


The International Monetary Fund said on Wednesday it will freeze its benchmark currency basket until October 2016, giving markets more time to adjust to the possible addition of China's yuan as part of a review of global reserve currencies.

The IMF board is scheduled to decide in November whether the yuan will join the Special Drawing Rights basket.

Beijing loosened government controls on the yuan this month, allowing its value to fall sharply. The IMF saw the policy shift as a step toward a freer exchange rate, potentially setting the stage for the yuan to become part of the SDR basket.

The decision announced in a statement on Wednesday, however, would defer the implementation of any move to include the yuan.

Beijing, keen for its currency to have equal billing with the euro, yen, pound and dollar, has been pushing for the yuan to be included in the SDR basket, which determines the mix of currencies that countries like Greece receive as IMF disbursements.


Staff said freezing the current basket, which had been due to expire on Dec. 31, would give parties more lead time to adjust to any changes.

Chinese Premier Li Keqiang in March asked IMF Managing Director Christine Lagarde to push for inclusion, saying Beijing would speed up the convertibility of the yuan and liberalize cross-border investment rules.

Lagarde has said adding the yuan to the basket is a "question of when."

Edited by ParticleMan

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