Free Republic

It is true that the riots in France were not the only reason behind the decline of the euro It is quite natural that 13 days of nighttime unrest on the streets of Parisian suburbs had an overall negative impact on the economic situation in France. The riots impacted the EU financial system since the France is one of the "driving belts" of the EU. The events triggered the so called negative investment and virtually toppled the exchange rate of the single European currency. Yesterday the euro fell to all-time low at the Moscow Interbank Currency Exchange: European currencyit became...

Congress shall make no law respecting wages, prices, rents, interest rates, exchange rates or any other exchange rate.

China launches currency shake-up China has revalued its currency, the yuan, for the first time in a decade - a move welcomed by the US, a long-time critic of its exchange-rate policy. The reform is being seen as the first step towards the liberalisation of China's tightly controlled currency. The yuan will no longer be pegged to the dollar, but will float against a basket of currencies. It will also appreciate against the dollar, mollifying critics who say a cheap yuan has helped Chinese exports. "I welcome China's announcement today that it is adopting a more flexible exchange rate regime,"...

With a view to establish and improve the socialist market economic system in China, enable the market to fully play its role in resource allocation as well as to put in place and further strengthen the managed floating exchange rate regime based on market supply and demand, the People's Bank of China, with authorization of the State Council, is hereby making the following announcements regarding reforming the RMB exchange rate regime: 1. Starting from July 21, 2005, China will reform the exchange rate regime by moving into a managed floating exchange rate regime based on market supply and demand with...

Some optimistic China watchers have speculated that Hu's approach to Taiwan might be more accommodating than the hawkish approach that was espoused by Jiang Zemin. This perception of an accommodating solution to the Taiwan “problem” might be influenced, however, by Washington's planned $18 billion sale of U.S.-made submarines and anti-missile systems to Taiwan. Although Taiwan's pledge to only buy and develop defensive weapons is on record, the country’s successful test-firing of surface-to-surface missiles some time ago has garnered more than a passing interest from China. Reports have noted that these missiles could hit parts of China's interior if fired from...

China put on notice over its currency By Andrew Balls and Scheherazade Daneshkhu in Washington Published: April 17 2005 19:11 | Last updated: April 17 2005 19:11The Group of Seven leading industrialised countries this weekend put China on notice that it must shift to a more flexible currency regime, with finance ministers demanding it take action immediately.  The G7's communique repeated its call for "more flexibility in exchange rates" where it was lacking, to help promote more balanced global growth, and added a demand that "vigorous action is needed to address global imbalances". Officials said there was no discussion of...

...The real puzzle is why required real rates of return are unusually low in the U.S. and abroad (as confirmed, for example, by the inflation-indexed yield of 1.8% offered in the U.K. government bond market). The answer is that we are to some extent still in a post-bubble world, in which there is an excess of global saving compared with perceived profitable global investment opportunities. In the late '90s bubble, the opposite was the case and rapid (in retrospect unsustainable) world investment rates surged ahead of savings, pushing up real interest rates (TIPS yields were at 4% in March 2000...

Central banks are shifting reserves away from the US and towards the eurozone in a move that looks set to deepen the Bush administration's difficulties in financing its ballooning current account deficit. In actions likely to undermine the dollar's value on currency markets, 70 per cent of central bank reserve managers said they had increased their exposure to the euro over the past two years. The majority thought eurozone money and debt markets were as attractive a destination for investment as the US. The findings emerge from a survey of central bank reserve managers published today and conducted between September...

Many of the world's central banks are starting to look to the euro to fill their currency reserves instead of the dollar, a survey suggests.

The dollar could slide still further, in spite of hitting an all-time low against the euro last week in the wake of George W. Bush's re-election, currency traders have said. The dollar sell-off has resumed amid fears among traders that Mr Bush's victory will bring four more years of widening US budget and current account deficits, heightened geopolitical risks and a policy of "benign neglect" of the dollar. Many currency traders were taken aback on Friday when the greenback fell in spite of bullish data showing the US economy created 337,000 jobs in October. "If this can't cause the dollar...

Tokyo stocks plunged Thursday morning following Wall Street's losses. The dollar rose against the Japanese yen. The Nikkei Stock Average of 225 issues was down 111.72 points, or 1.03 percent, at 10,740.75 points at the end of morning trading. On Wednesday, the index fell 75.56 points, or 0.69 percent. The dollar was trading at 106.04 yen at 11 a.m. Thursday, up 0.25 yen from late Wednesday in Tokyo and above the 106 yen it bought in New York later that day. On the stock market, U.S. stock losses largely discouraged early buying in Tokyo. Technology issues such as Advantest and...

Federal Reserve Taking Your Buying Power Away Congratulations to all of you who bought stock, you’ll see that you’re making money today as I write this –it’s just a co-incidence that the Federal Reserve just happened to add $8.75 Billion dollars to Open Market Operations at the same time the market rallied today. Is this the “unconventional means” Greenspan has spoken of using in his attempt to prop up our economy? You bet it is. Welcome to the Third Way – the mix of capitalism and state enterprise. Say good-bye to free markets, not that we ever really had such...

<p>The dollar continued its silent war against Europe yesterday, deepening political turmoil there and raising new demands for the European Union to fight back.</p> <p>Political leaders Italy, France and Germany publicly and privately demanded yesterday that economic steps be taken by the EU's central bank to block the dollar's affect on their weakened economies.</p>

``Our jaws dropped to the floor when we arrived this morning,'' said Michael Woolfolk, senior currency strategist at Bank of New York, which holds $6.8 trillion of assets in custody. ``Traders won't stop until they see the dollar at $1.20 per euro.'' Contrasting U.S. and European economies make the dollar's fall perplexing, some economists said. Gross domestic product in the U.S. is expected to grow 2.4 percent this year, the median forecast of economists surveyed this month by Bloomberg News. In Europe, the economies of Germany, Italy and the Netherlands are shrinking, and no growth is expected in Japan. ``This...

After years of urging others to reform economies, Washington changes tactics LONDON The Bush administration, unable to jawbone Europe and Japan into helping it stimulate a sluggish global economy, has decided to let its money do the talking. . That, analysts say, is the underlying message in the move by the U.S. Treasury to drop the ‘‘strong dollar’’ mantra that had been a hallmark of U.S. economic policy since the mid-1990s. . Since the mid-90s, the United States has accounted for about two-thirds of global economic growth, estimates Stephen Roach, chief economist at Morgan Stanley, as a strong dollar helped...

"Too big to fail" is the cancer of moral hazard in the US finance system. Many, including myself, have observed that the shrinking intermediary role of banks in funding the economy brought about by the rapid growth the non bank credit and capital markets has increased system risk in recent years. This risk manifests itself only in a bear market. This is now building up to a crisis. Banks have also compensated for their shrinking funding role by moving into equity investing and securitization and trading through their investment banking subsidiaries, not to mention drivative finance and trades. There is...

A Canadian bank robber in a US prison wants his sentence reduced because his country's dollar is worth less than the US currency.Robert Moisescu, from Montreal, says the cross-border dollar exchange rate should apply to his prison term. He has asked Clinton County Judge Patrick McGill to reduce his expected seven-year sentence to four.The 35-year-old has pleaded guilty to robbing a bank in Champlain, New York. He was arrested with the equivalent of £23,000. He says his criminal record is only worth 62% of an American's.Moisescu wrote to the judge: "Taking into account my Canadian criminal record - at current...