Banking
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- By Real Time Economics
- Hits: 1988
The bulk of economists surveyed by The Wall Street Journal would bet on the Chinese yuan rising over the next three years and the euro falling–but they’re split on the direction the U.S. dollar is likely to take.
The Journal surveyed 54 economists, not all of whom answer every question and most of whom are U.S.-based, and asked which one currency they would bet on rising in value over the next three years. Eighteen, or 43% of the 42 who responded to the question, pointed to the Chinese yuan. “Chinese inflation makes artificially low values difficult to sustain,” said Sean M. Snaith of the University of Central Florida.
Twelve economists, or 30% of 40 respondents to the question, chose the euro as the most likely to decline in value over that same period. “The debt crisis still has more iterations to go, which will rattle currency markets,” said Diane Swonk of Mesirow Financial.
And the dollar? Eleven said they would bet the greenback will rise in value over the next three years and exactly the same number said they would bet on its value declining.
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- By David Cao
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Just days ago HSBC Holdings PLC said earnings for 2010 doubled from a year earlier, to $13.2 billion, with Asia accounting for almost two-thirds of the profit. But Peter Wong, the bank's chief executive for Asia Pacific, is keen to stress the importance of cost control and measured growth.
Peter Wong says, "If I ever had the chance to write a book, it'd be about how to make complicated life simple."
Career: Joined Citibank in 1980 as an assistant financial controller. Moved to Standard Chartered in 1997 as head of consumer banking for China and Hong Kong. Joined HSBC in April 2005.
Education: educated at Indiana University. Has a bachelor's and MSc in computer science and an MBA in marketing and finance.
Extracurricular: Sports, especially playing golf. "Without sport I think I'd be dead already. Sport gives you a competitive sense."
On the financial crisis: "We [HSBC] were the first ones to come out and talk about subprime. Everybody thought we were smoking something. But later it came true."
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- By David Cao
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China's foreign exchange regulator has refuted media reports that the country may lose up to $450 billion by holding bonds of Fannie Mae and Freddie Mac, the US mortgage giants.
The reports suggested that the US government might phase out the two companies. "The report is groundless," the State Administration of Foreign Exchange (SAFE) said in a statement published on its website on Friday, without referring to any specific media outlets.
The regulator said that it has been receiving regular payments of interest and principal on the bonds it holds in the two companies.
"Calculated in accordance with widely used indexes, from 2008 to 2010 the annual investment return on the debt was about 6 percent on average," the statement said.
China has never invested in the two companies' equities, and so it hasn't been affected by the decline in their stock prices, it added.
The administration reiterated that security is its top priority when making investments using the country's foreign reserves, and it has already taken appropriate measures to offset major potential risks.
Read more: May Chinese lose their bonds of Fannie Mae and Freddie Mac ?
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- By David Cao
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China's central bank warned before the Lunar New Year break that it would focus on inflation, which has been forecast to top 5% in January.
Inflation jitters spread through emerging markets on Tuesday, prompting China's central bank to raise interest rates for the third time in four months amid worries that a drought threatening the country's wheat crop will put further pressure on global food prices.
With fireworks still echoing from China's Lunar New Year holiday, its central bank said it is raising rates by one-quarter percentage point. It was just the latest move by an emerging-market government—several of which are deploying a panoply of policies to battle inflation fueled by rising food and commodity prices and growth that is threatening to outstrip their productive capacity.
In Brazil, Latin America's largest economy, the government reported Tuesday that inflation is accelerating, leading markets to expect its central bank to increase its overnight rate, already at 11.25%.
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- By David Cao
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The central bank on Tuesday raised interest rates for the third time since mid-October by another 25 basis points, to help mop up liquidity and tame surging inflation.
Effective on Wednesday, the benchmark one-year lending rate will increase to 6.06 percent from 5.81 percent, and the one-year deposit rate will rise to 3 percent from 2.75 percent, the People's Bank of China (PBOC) said in an announcement on its website.
The tightening measure was announced right at the end of the Spring Festival holidays and one day before the markets open.
Lu Zhengwei, chief economist at Industrial Bank, said the move had been predicted as China maintains strong growth momentum, and the consumer price index (CPI), a major gauge of inflation, was expected to hit a record high in January.
The CPI rose 4.6 percent in December after jumping to a 28-month high of 5.1 percent in November.
The figure for January has yet to be disclosed.
The world's second-largest economy saw its growth expand by 9.8 percent in the fourth quarter of last year, compared to 9.6 percent in the third quarter.
"The risk of rising inflation cannot be neglected because major economies are expected to shore up their growth by maintaining an easy monetary stance. As a result, a large amount of capital flows into emerging economies," the PBOC said in a report published on Jan 30.
It added that rising costs for labor and resources also contribute to inflation.
Du Zhengzheng, a macro-economist at Bohai Securities, predicted that inflation will rise by 4 percent year-on-year in the first half of 2011, after surging to 5.2 percent in January.
"The pressure of increasing inflation has forced the PBOC to take action."
Read more: China central bank raised interest rates to help tame inflation
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