LexisNexis(TM) Academic - Document
LexisNexis(TM) Academic - DocumentCopyright 2005 The Financial Times Limited
Financial Times (London, England)
July 27, 2005 Wednesday
London Edition 1
SECTION: STOCK MARKETS & CURRENCIES; Pg. 42
LENGTH: 621 words
HEADLINE: China denies new renminbi move CURRENCY
BYLINE: By STEVE JOHNSON
BODY:
The yen fell once again yesterday as China poured further cold water on expectations of further renminbi appreciation to come.
The People's Bank of China said in a statement that last week's long-awaited 2.1 per cent revaluation of the renminbi was not a "first step", as many observers had concluded.
The new rate of Rmb8.11 to the dollar was an "equilibrium" level for the currency that would not be adjusted in the "foreseeable future", the PBoC added.
This weakened the Japanese yen, the most liquid play on generalised Asian currency strength.
However, many commentators still refused to believe that the renminbi story was done and dusted.
Jeremy Friesen, senior currency strategist at RBC Capital Markets, seized on reports that China's trade surplus will rise from Dollars 32bn in 2004 to Dollars 80bn this year, saying: "A more than doubling of China's external surplus this year will maintain political pressure for further renminbi appreciation, and we expect further concessions before year-end."
Tony Norfield, global head of forex strategy at ABN Amro, also claimed the PBoC's statement would do little to damp expectations. He argued China would find it hard to "sterilise" all its currency intervention - the issue of domestic bonds to mop up liquidity effectively created by printing renminbi to buy dollars. China would also face the renewed ire of US politicians if there was no further appreciation.
The forward market also doubted the PBoC's word, with non-deliverable forward renminbi/dollar contracts softening just a slight fraction to price in a further 4.6 per cent revaluation in the coming 12 months.
Hans Redeker, head of currency strategy at BNP Paribas, said the Shanghai stock exchange would now act as a bellwether of speculative inflows into China.
Mr Redeker is among those believing China will have to allow further renminbi strength if it wants to deter protectionist talk in the US and avoid overheating in its domestic economy.
Yesterday he advised his clients to sell the euro, Swiss franc and Swedish krona and take long positions in the Taiwan and Singapore dollars, yen and South Korean won to profit from this trend.
Nevertheless, the yen fell 0.8 per cent to Y112.29 against the dollar, 0.4 per cent to Y134.82 against the euro and 0.4 per cent to Y195.45 versus sterling.
Chris Towner, consultant at risk manager HIFX, argued that Y112.50 would now prove a resistance level for the dollar, with Japanese exporters keen to sell dollars above this level, given that most exporters have budgeted for an exchange rate nearer Y105.
However, Mr Towner believed Y110, a 50 per cent retracement of the yen's slide since June to last week's low of Y113.75, would provide a resistance level for the currency.
Elsewhere, the dollar ticked higher yesterday, gaining 0.3 per cent to Dollars 1.2 against the euro, 0.3 per cent to Dollars 1.7399 against sterling and 1 per cent to CDollars 1.2299 against the Canadian dollar.
The greenback held in positive territory despite a modest sell-off when the US Conference Board's measure of consumer confidence came in soft, with the index dipping to 103.2 in July, against expectations for a repeat of June's 106.2 reading.
The euro saw little benefit from Germany's IFO index of business sentiment, which rose to a five-month high of 95 in July, from 93.3 in June.
Mitul Kotecha, global head of forex strategy at Calyon, said sentiment was aided by weakness in the euro and the announcement of early German elections, both of which are likely to be temporary factors, he argued.
Sterling firmed a fraction to Pounds 0.6896 against the euro on a better-than-expected CBI manufacturing survey.
The Australian dollar fell 0.8 per cent to Dollars 0.7573 against the greenback.
LOAD-DATE: July 27, 2005
Financial Times (London, England)
July 27, 2005 Wednesday
London Edition 1
SECTION: STOCK MARKETS & CURRENCIES; Pg. 42
LENGTH: 621 words
HEADLINE: China denies new renminbi move CURRENCY
BYLINE: By STEVE JOHNSON
BODY:
The yen fell once again yesterday as China poured further cold water on expectations of further renminbi appreciation to come.
The People's Bank of China said in a statement that last week's long-awaited 2.1 per cent revaluation of the renminbi was not a "first step", as many observers had concluded.
The new rate of Rmb8.11 to the dollar was an "equilibrium" level for the currency that would not be adjusted in the "foreseeable future", the PBoC added.
This weakened the Japanese yen, the most liquid play on generalised Asian currency strength.
However, many commentators still refused to believe that the renminbi story was done and dusted.
Jeremy Friesen, senior currency strategist at RBC Capital Markets, seized on reports that China's trade surplus will rise from Dollars 32bn in 2004 to Dollars 80bn this year, saying: "A more than doubling of China's external surplus this year will maintain political pressure for further renminbi appreciation, and we expect further concessions before year-end."
Tony Norfield, global head of forex strategy at ABN Amro, also claimed the PBoC's statement would do little to damp expectations. He argued China would find it hard to "sterilise" all its currency intervention - the issue of domestic bonds to mop up liquidity effectively created by printing renminbi to buy dollars. China would also face the renewed ire of US politicians if there was no further appreciation.
The forward market also doubted the PBoC's word, with non-deliverable forward renminbi/dollar contracts softening just a slight fraction to price in a further 4.6 per cent revaluation in the coming 12 months.
Hans Redeker, head of currency strategy at BNP Paribas, said the Shanghai stock exchange would now act as a bellwether of speculative inflows into China.
Mr Redeker is among those believing China will have to allow further renminbi strength if it wants to deter protectionist talk in the US and avoid overheating in its domestic economy.
Yesterday he advised his clients to sell the euro, Swiss franc and Swedish krona and take long positions in the Taiwan and Singapore dollars, yen and South Korean won to profit from this trend.
Nevertheless, the yen fell 0.8 per cent to Y112.29 against the dollar, 0.4 per cent to Y134.82 against the euro and 0.4 per cent to Y195.45 versus sterling.
Chris Towner, consultant at risk manager HIFX, argued that Y112.50 would now prove a resistance level for the dollar, with Japanese exporters keen to sell dollars above this level, given that most exporters have budgeted for an exchange rate nearer Y105.
However, Mr Towner believed Y110, a 50 per cent retracement of the yen's slide since June to last week's low of Y113.75, would provide a resistance level for the currency.
Elsewhere, the dollar ticked higher yesterday, gaining 0.3 per cent to Dollars 1.2 against the euro, 0.3 per cent to Dollars 1.7399 against sterling and 1 per cent to CDollars 1.2299 against the Canadian dollar.
The greenback held in positive territory despite a modest sell-off when the US Conference Board's measure of consumer confidence came in soft, with the index dipping to 103.2 in July, against expectations for a repeat of June's 106.2 reading.
The euro saw little benefit from Germany's IFO index of business sentiment, which rose to a five-month high of 95 in July, from 93.3 in June.
Mitul Kotecha, global head of forex strategy at Calyon, said sentiment was aided by weakness in the euro and the announcement of early German elections, both of which are likely to be temporary factors, he argued.
Sterling firmed a fraction to Pounds 0.6896 against the euro on a better-than-expected CBI manufacturing survey.
The Australian dollar fell 0.8 per cent to Dollars 0.7573 against the greenback.
LOAD-DATE: July 27, 2005
posted by Eastlaw at Wednesday, July 27, 2005
0 Comments:
Post a Comment
<< Home