Forex swap move fixes target for Chinese currency
CHINA initiated currency swaps involving major
banks yesterday in an apparent attempt to upgrade its exchange system, a move
analysts say may help dampen speculation over the yuan's further
appreciation.
CHINA initiated currency swaps involving major banks yesterday in an apparent attempt to upgrade its exchange system, a move analysts say may help dampen speculation over the yuan's further appreciation.
The decision, for the first time, may give an important signal on the government's benchmark for the value of the yuan a year from now.
China's central bank swapped US$6 billion for yuan at a rate of 8.0810 with 10 mainland lenders, including the country's big four state-owned banks, as well as several policy and joint-stock banks, sources said.
The central bank pledged to buy back its dollar holdings a year from now at a rate of 7.85 yuan (97 US cents), they said
Establishing a buy-back floor price like this will guarantee employment for some US CFO’s who often have to bet, today -- what the exchange rate will be in a year.
I have an old buddy in Dallas who wishes he had something like this in place when he had to buy yen with dollars back in the 80's. He'd probably still be VP for Purchasing. Oops! Maybe not. That company is owned by someone in Shanghai, nowadays.
The swap deal came just one day after an announcement by the country's forex regulator that China plans to introduce market makers into its interbank foreign-currency bourse starting next year.
Wonder if folks in Congress ever actually read anything current about what’s happening in China business?
Posted: Fri - November 25, 2005 at 08:25 PM