G-20 MEMBERS TO SEEK APPRECIATION OF ASIAN CURRENCIES, UBS SAYS
Lilian Karunungan
Bloomberg, November 6, 2009
The Group of 20 finance chiefs will likely push for Asian nations to allow their currencies to appreciate when they meet in Scotland this weekend, according to UBS AG, the world’s second-largest foreign-exchange trader.
G-20 finance ministers and central bankers, including U.S. Treasury Secretary Timothy Geithner and European Central Bank President Jean-Claude Trichet, start two days of talks today in St. Andrews, Scotland. While exchange rates won’t be on the agenda, “many nations will seek to bring it up,” Geoffrey Yu, foreign-exchange strategist in London at UBS, wrote in a research report to clients today
China, the world’s third largest economy, has prevented the yuan from appreciating since July 2008, after it strengthened 21 percent against the dollar in the previous three years. Currency reserves have climbed about 20 percent in China, South Korea and Taiwan in the past year, a sign of dollar purchases designed to stop stronger exchange-rates from hurting exports.
“The Eurozone will likely press hard on the topic, and Asia will once again be on the receiving end of complaints due to inflexibility in many of the region’s currencies,” Yu wrote. “According to the U.S. Treasury, the U.S. is also seeking to use the G-20 to push for a plan for global rebalancing.”
The G-20 finance ministers’ agenda involves measuring the effects of member nations’ economic policies and proposing changes for their leaders, who meet in June. China and other Asian nations have accumulated dollars from widening trade surpluses, buying U.S. Treasury debt and depressing global yields. Lower borrowing costs helped stoke the U.S. housing and credit booms that turned to bust in 2007.
Lilian Karunungan
Bloomberg, November 6, 2009
The Group of 20 finance chiefs will likely push for Asian nations to allow their currencies to appreciate when they meet in Scotland this weekend, according to UBS AG, the world’s second-largest foreign-exchange trader.
G-20 finance ministers and central bankers, including U.S. Treasury Secretary Timothy Geithner and European Central Bank President Jean-Claude Trichet, start two days of talks today in St. Andrews, Scotland. While exchange rates won’t be on the agenda, “many nations will seek to bring it up,” Geoffrey Yu, foreign-exchange strategist in London at UBS, wrote in a research report to clients today
China, the world’s third largest economy, has prevented the yuan from appreciating since July 2008, after it strengthened 21 percent against the dollar in the previous three years. Currency reserves have climbed about 20 percent in China, South Korea and Taiwan in the past year, a sign of dollar purchases designed to stop stronger exchange-rates from hurting exports.
“The Eurozone will likely press hard on the topic, and Asia will once again be on the receiving end of complaints due to inflexibility in many of the region’s currencies,” Yu wrote. “According to the U.S. Treasury, the U.S. is also seeking to use the G-20 to push for a plan for global rebalancing.”
The G-20 finance ministers’ agenda involves measuring the effects of member nations’ economic policies and proposing changes for their leaders, who meet in June. China and other Asian nations have accumulated dollars from widening trade surpluses, buying U.S. Treasury debt and depressing global yields. Lower borrowing costs helped stoke the U.S. housing and credit booms that turned to bust in 2007.
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