Central Banker Dismisses Prospect of Yuan Surge

BEIJING -- China's central-bank governor said a stronger currency isn't the best or only way to fight inflation, countering widespread expectations that the yuan's gains will accelerate as the nation's prices rise at their fastest pace in more than a decade.

"Faster currency appreciation helps to rein in inflation, but not a lot," Zhou Xiaochuan, governor of the People's Bank of China, told reporters on Thursday. "To curb inflation, we will rely more on domestic policies....There is no need to use exchange-rate reforms as a way to fight inflation.

Mr. Zhou's statements were unusual because the central bank is widely seen as an advocate of a stronger currency, a policy that is disliked by exporters and often has been opposed by other parts of the Chinese bureaucracy. Indeed, in its October monetary policy report, the People's Bank of China wrote that "Theoretical economic analysis and the experience of many countries both show that an appreciation of the currency helps contain domestic inflation."

China has pushed up the yuan at a faster rate against the dollar since inflation first surged above 3% in March last year. The Chinese currency rose 4.2% against the dollar in the second half of last year alone, and is up a further 2.6% this year. (Because the dollar is falling against other currencies, the yuan is down 1.9% against the euro this year.)

http://online.wsj.com/article/SB120480262528616485.html?mod=todays_europe_money_and_investing

Could the Dollar Be On The Way Out?

The dollar has been the world's reserve currency for more than 60 years. What happens if people no longer want to hold dollars? - MT

Beaten down by fears of a U.S. recession, the dollar is falling with new speed -- creating severe challenges not just for the U.S., but also for sugar traders in Brazil, central bankers in the Persian Gulf and a host of others.The greenback's biggest detractors -- a small but growing group -- say the currency is in danger of eventually losing its place as the world's dominant currency. Jim Rogers, a well-known commodity investor and a former partner of famed currency trader George Soros, has a particularly bleak assessment: "The dollar is a terribly flawed currency and its days are numbered," he said in a recent interview. He cited the U.S.'s huge foreign-held debt as the biggest cause.

http://online.wsj.com/article/SB120423483765800801.html?mod=hps_us_pageone

http://online.wsj.com/article/SB120424991252301815.html?mod=hps_us_pageone

http://www.nytimes.com/aponline/business/AP-Dollar.html?scp=2&sq=Dollar&st=nyt

http://www.nytimes.com/reuters/business/business-markets-forex.html?scp=1&sq=Dollar&st=nyt

http://krugman.blogs.nytimes.com/2007/11/08/dollar-doldrums/?scp=4-b&sq=Dollar&st=nyt

Will Dollar Overshadow Yuan?

WASHINGTON -- When the world's top economic officials meet in Tokyo this weekend, they will likely stand shoulder-to-shoulder to complain about the weak Chinese yuan. Behind closed doors, they are much more likely to squabble about over the weak dollar.
The soft dollar is lifting U.S. exports and providing a cushion just as the U.S. teeters on the edge of recession. Europeans and Canadians are watching with alarm as their strong currencies make it harder for them to compete against U.S. companies -- and firms from countries whose currencies closely track the dollar.http://online.wsj.com/article/SB120223743191044741.html

Is U.S. Dollar Slowing Turning Into The Yen?

The U.S. financial crisis is starting to look eerily like Japan's: a real-estate bust after years of speculation, banks saddled with mountains of bad debt, interest rates heading lower as policy makers try to goose a slowing economy. The developments have some currency traders asking the previously unthinkable: Could the U.S. dollar slowly be turning into the Western equivalent of the yen? http://online.wsj.com/article/SB120147966674720853.html

Overseas Investors Buy Into U.S.

Last May, a Saudi Arabian conglomerate bought a Massachusetts plastics maker. In November, a French company established a new factory in Adrian, Mich., adding 189 automotive jobs to an area accustomed to layoffs. In December, a British company bought a New Jersey maker of cough syrup. For much of the world, the United States is now on sale at discount prices. With credit tight, unemployment growing and worries mounting about a potential recession, American business and government leaders are courting foreign money to keep the economy growing.

Foreign investors are buying aggressively, taking advantage of American duress and a weak dollar to snap up what many see as bargains, while making inroads to the world’s largest market.Last year, foreign investors poured a record $414 billion into securing stakes in American companies, factories and other properties through private deals and purchases of publicly traded stock, according to Thomson Financial, a research firm. That was up 90 percent from the previous year and more than double the average for the last decade. It amounted to more than one-fourth of all announced deals for the year, Thomson said.

http://www.nytimes.com/2008/01/20/business/20invest.html?ex=1358571600&en=34079637cb59bb3a&ei=5124&partner=permalink&exprod=permalink

Expat Life Gets less Cushy

The cushy expat lifestyle is increasingly a thing of the past, The WSJ reports. Story is about corporations and executives who work overseas, but the mantra is much the same for foreign correspondents. Times are tough.

The WSJ says corporate cost-cutting has been eroding lavish packages -- once replete with premium pay and hefty allowances for maids, drivers and schooling -- for some time. Now the falling dollar and changes to the U.S. tax code have sharply eroded the lifestyles of executives and their families posted overseas. The perks of lore are now largely reserved for only the highest level executives or hardship postings like Kuwait and Pakistan.

The weak dollar is causing much of the pain. The dollar has dropped more than 25% against the euro since the end of 2002 and reached parity with the Canadian dollar for the first time in more than 30 years. It has lost almost half of its value against the Brazilian real since 2003.

J467 Students can read the full story on Blackboard, under heading course documents.

https://blackboard.ohiou.edu/