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Hot money bet on RMB once again
www.chinanews.cn 2005-04-26 13:10:17
Chinanews, April 26 - Hot money returned to Hong Kong after leaving
abruptly not quite a month ago. RMB one year non-deliverable forward
(NDF) climbed sharply, reaching a high of 4925 points, increasing over
500 points over the previous Friday's level. As a predictive indicator of
an RMB appreciation, these statistics indicate that the overseas market
has once again warmed up to speculate on an upward move in the value of
the Yuan.
At 5 p.m. yesterday, one year USD/RMB NDF closed at 7.8065, a premium of
4700 points. Intra-day the NDF fell as low as 7.784, nearing a new
one-month low.
These movements were related to the appreciation pressure exerted on the
RMB in the past week by the international community, especially the U.S.
A week ago, the G7 Finance Ministers' meeting did not apply formal
pressure on the Chinese currency. But afterwards, U.S. Treasury Secretary
John Snow "specifically" pointed out that China has adequately prepared
for a more flexible exchange rate mechanism. Even though that was much
more moderate than the intervention desired by the U.S. Congress, it was
still unequivocably moving in the direction of a more flexible RMB.
This appeared to be the turning point. Following Snow's remarks, one year
NDF ended its rebound that lasted several weeks and started to decline
from the 7.8965 level.
Around the same time, Federal Reserve Chairman Alan Greenspan put in his
two cents worth. On the 23rd, testifying before a senate subcommittee
hearing, Greenspan said the RMB should unpeg from the U.S. dollar. The
peg would be detrimental to China's economic development. At the same
time, he predicted the timing of China's move on its currency, "Sooner
rather than later."
The following day, the 2005 Boao Forum for Asia provided another platform
for the world to discuss problems related to reforming the RMB exchange
rate. Even though views diverged, there was still a consensus -- the
reform of the RMB exchange mechanism was imminent.
��Citi Group: RMB appreciation in 3 months (2005-04-06)
��RMB appreciation a certainty (2005-03-31)
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��RMB appreciation: causes and consequences (2005-03-21)
��Expert: RMB will appreciate but no fixed timetable
(2005-03-10)
��No fixed timetable for reforming the RMB (2005-03-07)
��5 billion HKD of hot money left the SAR (2005-02-04)
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8610-68327649
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