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Younes Huber

News Hounds: Prince Alwaleed bin Talal, Rupert Murdoch and the United Arab Emirates - 1 views

  • Younes Huber
     
    Foreign investment is good for the expansion of a country's economy. However, could foreign ownership of domestic firms affect their reliability? In this case the (IMO already unreliable) news channel giant Fox News is put under pressure by its second largest shareholder: Prince Alwaleed Bin Talal, Saudi billionaire. Whether it is to correct awry facts or not, he could be meddling in the freedom of the press. Protectionism required?
rohan rajiv

BBC NEWS | Business | Economy sweats over Aussie dollar - 1 views

  • weakness of sterling
    • rohan rajiv
       
      weak pound
  • The Australian dollar was hovering above 60 US cents in February, but is now flexing its muscles above 90 cents.
    • rohan rajiv
       
      why has itincreased?
    • rohan rajiv
       
      Is this somethings i should talk about in the explnation?
    • Jason Welker
       
      YES! You shoudl definitley talk about WHY the AUD has appreciated. Otherwise, what is your commentary going to be about?
  • This vigorous comeback is closely linked to a floundering US economy.
    • rohan rajiv
       
      How does the US economy affect the rise in the Australian Dollar?
  • ...5 more annotations...
  • Investors who sought sanctuary with the greenback during the global crash are now favouring riskier alternative
    • Jason Welker
       
      During the recession global investors "fled to the safety of the USD" but now that the recession is ending overseas, investors are putting their money back into other countries. Since Australia's big trading partner (China) is growing at 9%, investors have faith that the AU economy will remain strong, the AUD will continue to strengthen, so they're demanding more AUD NOW!
  • Much of the region has already locked in long-term contracts with overseas buyers, which should insulate exporters from unpredictable shifts in the exchange rate.
    • rohan rajiv
       
      As the AUD appreciates, doing business in AU gets more costly for foreign buyers of AU's output. So they would WANT to re-negotiate their contracts at lower price (in terms of AUD). But they can't do this because they "already locked in long-term contracts"
  • profits in some areas will inevitably be squeezed.
    • rohan rajiv
       
      ?
    • Jason Welker
       
      Strong AUD is bad for business!
  • "and until we see interest rates start to move up in the US, we're not going to see our dollar come down.
    • rohan rajiv
       
      I know interests rates is a determinant of exchange rates but I dont see how it applies here.
    • Jason Welker
       
      As long as AU interest rates are higher than US interest rates, foreigners will prefer to put their money in the AU economy, thus keep demand for AUD high. When US interest rates rise once again, investors will shift money back to the US, appreciating the USD against other currencies, including the AUD
  • Australia's importers will also do well out of the high-performance local dollar, but everyone else is set for more suffering.
    • rohan rajiv
       
      everyone else?
    • Jason Welker
       
      Meaning firms that export to the rest of the world. Importers are obviously happy, cause their imported goods, services, and raw materials are cheaper with the strong AUD. But not so for businesses that depend on foreign consumers.
  • rohan rajiv
     
    This article talks about the rise in the Australian Dollar and how it affects the citizens and how it might affect the trade.
Younes Huber

Brazil stocks edge up in choppy trade, real slips | Currencies | Reuters - 2 views

  • Investors were looking at the short-term horizon in putting
    profits from those gains in their pockets
  • Brazil's currency, the real (BRBY), weakened 0.47 percent
    to 1.71 per dollar. Brazil's finance minister, Guido Mantega,
    said at a televised event in Sao Paulo that the real has become
    overvalued as foreign inflows have poured dollars into Brazil.
    • Younes Huber
       
      What is meant by "foreign inflow"
  • "we don't want exaggerated
    inflows," he said. "We now have an overvaluation of the
    Brazilian currency.
  • ...5 more annotations...
  • The real has gained about 36 percent against the dollar so
    far this year.
    • Younes Huber
       
      Strong real threatens Brazil's economic recovery
  • Investors also booked profits on some banks, which had
    gained during the previous session
  • investors see the 2014 World Cup and the 2016 Olympics, both
    slated for Brazil, as potentially sparking massive construction
    and infrastructure projects.
    • Younes Huber
       
      speculators see future appreciation of Real, demand more if it now!
  • Changes in yields on Brazilian interest rate futures
    contracts <0#DIJ:> were mixed, with many contracts either
    remaining flat or dipping.
  • Investors use the contracts to bet on trends in the
    country's benchmark interest rate, the Selic, currently at a
    record-low 8.75 percent.
    • Younes Huber
       
      Predicted interest rate changes affect demand for currencies. Low interest rates reduce demand for real, thus exchange rate
Dimitri Da Ponte

Aussie, Kiwi Post Weekly Gains as RBA Raises Growth Outlook - Bloomberg.com - 0 views

  • The Australian dollar strengthened,
    advancing almost 2 percent for the week, as the central bank
    signaled it will add to two interest-rate increases over the
    past month because the economy’s expansion will accelerate.
    • Jason Welker
       
      Identify the deteriminant of ER at work here? (expected future interest rates) Why does this affect the forex market for the AUD?
  • New Zealand’s dollar also rose this week against
    the greenback and yen.
  • Australia’s currency rose to 91.65 U.S. cents at 1 p.m. in
    New York from 91.02 cents yesterday. It fell 0.3 percent to
    82.31 yen. The currency is set to advance 1.9 percent against
    the U.S. dollar and 1.5 percent versus the yen this week.
  • ...8 more annotations...
  • New Zealand’s dollar increased 0.5 percent to 72.47 U.S.
    cents, advancing 1 percent since Oct. 30. It bought 65.08 yen
    and has risen 0.6 percent this week.
  • Gross domestic product will rise 1.75 percent this year and
    3.25 percent in 2010, the Reserve Bank of Australia said. Three
    months ago, it forecast gains of 0.5 percent and 2.25 percent
    respectively.
    • Dimitri Da Ponte
       
      wats a weighted average yield?
    • Jason Welker
       
      Need to see the passage.
  • Benchmark interest rates are 3.5 percent in Australia and
    2.5 percent in New Zealand, compared with 0.1 percent in Japan
    and as low as zero in the U.S., attracting investors to the
    South Pacific nations’ higher-yielding assets.
    • Dimitri Da Ponte
       
      is this relevant or is it too much detail?
  • The unemployment rate in the U.S. soared to a 26-year high
    of 10.2 percent in October and employers cut 190,00 workers,
    compared with a 175,000 drop anticipated by the median forecast
    of economists
  • Australia today sold A$700 million ($637 million) of
    securities maturing April 2012 at a weighted average yield of
    5.02 percent
    • Jason Welker
       
      contractionary monetary policy increases domestic interest rates and attracts foreign investment in AUD assets, increased demand for AUD
  • Australian government bonds fell with the yield on 10-year
    notes up five basis points, or 0.05 percentage point, to 5.60
    percent
    • Jason Welker
       
      Contractionalry monetary policy needed in AUD to slow the pace of recovery.
  • Dimitri Da Ponte
     
    Australia's currency is rising as the economy is growing
    Possible commentary!
Marc L

Brazil Studies Investment Tax To Counter Strong Real - WSJ.com - 2 views

  • heavy investment inflows may be hurting exports by depressing the value of the U.S. dollar against the Brazilian real.
    • Jason Welker
       
      Easy to draw a diagram for this! (two diagrams, dollar market and real market)
  • government was studying the possibility of reinstating taxes on fixed-income investments by foreigners in order to reduce inflows and contain the appreciation of the real.
    • Marc L
       
      brazilian intrest rates are around 8% could adjusting that, decrease demand for the Real?
    • Jason Welker
       
      Lower interest rates may also reduce demand for reals, yes.
  • ...10 more annotations...
  • The real, quoted at BRL1.71 to the dollar in Friday trading, has appreciated 37% against the dollar so far in 2009.
    • Jason Welker
       
      Wow... significant strengthening of real (weakening of dollar)
  • impact of the strong real is already being felt on the country's trade balance. Brazil posted a September foreign trade surplus of only $1.33 billion, down sharply from $3.06 billion in August and $2.76 billion in September of 2008
    • Jason Welker
       
      definition: trade balance, "strong real"
    • Marc L
       
      demand for Brazilian output has already decreased due to the appreciation of the Real
    • Jason Welker
       
      Impact on AD/AS? Employment? Output?
  • Brazil's current account deficit is likely to rise to $29 billion in 2010 from an estimated $18 billion this year, according to projections by the Brazilian Central Bank.
    • Jason Welker
       
      is this due to an increase of imports or a decrease in exports, or BOTH?
  • Finance Minister Guido Mantega said to reporters, "Yes, I'm a little worried about the strong real."
  • "If the government adopts the tax measures, they could indeed help contain the appreciation of the local currency," said Sidnei Nehme
  • "They would have the effect of reducing short-term investment inflows."
    • Jason Welker
       
      Explain the capital (financial account) and discuss why there is so much demand for brazilian assets (real and financial). This is probably due to Brazil's current account deficit. If foreigners demand Brazilian assets, this represents a capital account surplus (and puts upward pressure on the real).
  • net foreign currency inflows into Brazil for 2009 through Oct. 9 were $11.98 billion. By contrast, Brazil posted net foreign currency outflows for the 2008 calendar year of $983 million.
    • Jason Welker
       
      $12b - $1b = capital (finaicial) account surplus of around $11b. Good data
    • Marc L
       
      is this only in the current account or the whole trade balance?
    • Marc L
       
      the foreign investment tax has been set to 2 %, is it ok if this article is from before that was actually changed?
Rocio Perez

Trade protectionism no savior of crisis_English_Xinhua - 0 views

  • Rocio Perez
     
    The article talks about the importance of reducing protectionist measures in times of a recession. China and the ASEAN (Association of Southeast Asian Nations ) are fully supportive of free trade as it stimulates economic activity. The CAFTA will be implemented so that there is a zero tariff policy on 90% of the products traded between these countries. This means lower prices, and more consumption. In an interdependent economy, opening up ties to other nations will quarantee growth within each country, and putting up barriers could only have a negative impact. However, what about protectionism and the rights of the domestic workers?
  • Jason Welker
     
    Rocio. Where are you highlight? I would like to leave comments on the article for you, but I need to see your highlights first! (See Gabriel's above). Are the words above YOURS or is this basically what the article is saying? If this is your paraphrasing of the article, then I suspect it might not be too appropriate as this is the kind of analysis you should be doing, rather than the article itself.
  • Rocio Perez
     
    I highlighted already but it only shows up in my own profile page. :(

    Maybe this will work: http://news.xinhuanet.com/english/2009-10/23/content_12305940.htm
Bastien Vogt

Japan wants yen to be the anchor of Asia | Business | The Guardian - 0 views

  • Plans for the yen to become the anchor in a new Asian currency area are being floated by Japan as Tokyo challenges China for leadership of the world's most dynamic economic zone.
    • Jason Welker
       
      waht do you think is meant by "anchor"?
  • role played by the German mark in
    • Bastien Vogt
       
      what role did the german markplay ?
    • Jason Welker
       
      I don't know you didn't include the rest of the sentence?!
  • apan is urging other countries in east and south-east Asia to yoke their currencies together as part of a drive for closer integration and even faster growth.
    • Jason Welker
       
      If the US$ is replaced as a reserve currency, how would this affect the value of the dollar relative to other Asian currencies? Would Asian governments favor a policy that led to a major weakening of the dollar? Why or why not?
  • ...13 more annotations...
  • c bloc
    • Bastien Vogt
       
      economic blocs ?
    • Jason Welker
       
      Yes, you are in C Block economics...very good basti!
  • nance signalled a willingness to continue intervening aggressively on the foreign exchange markets to hold down the yen, but is part of a longer term strategy designed to allow Asia to compete with the economic blocs in Europe and the Americas.
    • Jason Welker
       
      Japan is afraid a strong Yen will make it difficult to compete in Europe and the US with other EEA and NAFTA countries.... a weak Yen will allow Japan to continue to compete.
  • apan would be like the German mark the key currency in an Asian currency unit."
  • apan had no opposition to an Asian single currency. It was the possible culmination of a process lasting at least 25 to 30 years in which closer trade links, economic partnership agreements and an agreement to peg currencies would gradually bring the region's economies closer together.
    • Jason Welker
       
      Refer to the course companion section on "monetary unions" to discuss the pros and the cons of a single currency. Would asia benefit if it had its own version of the euro?
  • In the short-term, the ministry of finance is worried about the impact of a stronger yen on Japan's exports, but in the medium and long term its concerns focus on the threat posed by China to Japan's leadership role in the region.
    • Jason Welker
       
      China's exchange market interventions are a threat to Japan
  • ade it clear that the government would intervene again should the upward pressure on the Japanese currency persist.
    • Jason Welker
       
      Again, for obvious reasons, japan wants its currency to remain weak... it's an export oriented economy. With a strong Yen, exports suffer!
  • Big companies have no real problems because they have global production, but the smaller companies do have problems. The market is not working in favour of a cheaper yen."
    • Jason Welker
       
      Interesting. Japanese multi-nationals are sheltered from the strengthening Yen. It's the local, smaller employers who are hurt.
  • was being "sterilised" by the authorities in an attempt to prevent too much liquidity building up in Japan's banking system
  • urozone were not more troubled by the weakness of the dollar against the single currency, a trend which is making exports from Europe more expensive.
    • Jason Welker
       
      Dollar's slide hurts not only Japan, but all of Europe too!
  • Japan believes China should already be making plans for the flotation of the renminbi to prevent the development of a huge asset bubble
  • set bu
    • Bastien Vogt
       
      asset bubble??
  • e don't want to see the knock-on effects [of a bursting bubble] on the smaller Asian
  • na should prepare for a more flexible currency regime by taking action on non-performing loans and by liberalising capital controls to allow money to flow out of the country. Tokyo's proposal is for China to float against a basket of currencies.
    • Jason Welker
       
      Haha, a floating RMB! That will be the day!
Daniel Edmonds

BBC NEWS | Asia-Pacific | US hits China pipes with tariffs - 0 views

  • The US Commerce Department has imposed anti-dumping tariffs of up to 99% on imports of Chinese tubular goods.
    • Jason Welker
       
      Good, easy to explain... define dumping, define tariffs, explain why dumping tariffs are necessary to protect against unfair competition.
  • The department alleged China had been selling its oil well pipes at prices that were much lower than normal.
  • en selling its oil well pipes at prices that were much lower than normal.
    • Daniel Edmonds
       
      The Chinese have been dumpign oil well pipes for a lot lower price than it is produced in America.
    • Jason Welker
       
      Why would anyone sell at a price below their cost of production?
  • ...3 more annotations...
  • In September, the United States announced it would impose duties on Chinese-made tyres to protect local US industry, sparking the first major trade dispute of Obama's presidency.
    • Daniel Edmonds
       
      America decided to act by placing a tarrif on cheap Chinese tieres and oil well pipes
    • Jason Welker
       
      Is this a trade war in the making?
  • "China resolutely opposes the abuse of protectionist measures, and will take measures to protect the interests of our domestic industry," said a statement issued by the the Ministry of Commerce.
    • Daniel Edmonds
       
      China is against tarrif on its exported oil well pipes and its tieres
    • Jason Welker
       
      A tariff on pipes and tires decreases producer surplus in china, and reduces net exports, meaning weaker AD and lower output, growth and employment in China... .you can draw an AD/AS diagram for this.
  • China launched anti-dumping and anti-subsidy investigations into imports of US chicken parts and automotive parts, in response to the US tyre duties.
    • Daniel Edmonds
       
      As a result of the tarrif on Chinese imported goods such as oil well pipes and tieres China has responsded by placing a tarrif on the Domestic Chicken industry in America
  • Daniel Edmonds
     
    This article is about America placing a tarrif on Chinese exported tieres and oil well pipes.
  • Jason Welker
     
    could you discuss the Chinese exchange rate intervention that has kept the RMB weak?
Benji Bucket

The Dollar's Value Against Foreign Currencies Declines - TIME - 1 views

  • 200 metric tons of gold to India's central bank for $6.7 billion.
    • Benji Bucket
       
      India is scared of the dollar loosing value, and is therefore subtly trying to offload some of its dollar reserves by buying gold. The fact that they have put $6.7 billion dollars onto the market has probably weakened the dollar further though, damaging the dollars they still hold in reserve.
  • dollars accounted for only 37% of new reserves accumulated by central banks
    worldwide. That's the lowest proportion on record for any quarter during which
    reserves increased significantly. At a time when many central banks are boosting
    their reserves, they are choosing to buy euro and yen instead.
    • Benji Bucket
       
      Here I can graph how demand for dollars in europe is declining, and supply of dollars is decreasing. Alternatively, I could demonstrate how more dollars are in the market in america, also causing the dollar to depreciate.
  • Benji Bucket
     
    The dollar is depreciating and fast. As a result Central banks are toying with the idea of offloading their reserves of dollars, but fear that they will contribute to the depreciation of the dollar, causing their remaining reserves to collapse in value. Foreign nations attempting to export to the US are also preparing to struggle to do so, as their own currencies gain in value in relation to the dollar.
Christian Evertz

Chinese trade barriers still costing Europe, says Mandelson | Business | guardian.co.uk - 1 views

  • But in other cases, I don't think they are keeping to the spirit of their
    commitments.
  • "I have no doubt we have gained. But I have previously estimated that these
    barriers were costing us [Europe] something in the region of €20bn [£17.5bn]
    worth of trade – and I think if anything that is growing."
    • Christian Evertz
       
      The 20 bn Euro loss to Europe indicates that trade barriers create a decrease in foreign producer surplus
    • Jason Welker
       
      You could graph this, showing loss of surplus and DWL
  • when we are open to China's goods and services, it must become progressively and
    more speedily open to ours."
    • Christian Evertz
       
      It is in Europes interest that trade with China should occurs on a mutual basis so that both parties benefit
    • Jason Welker
       
      Reciprocate removal of tariffs
  • ...5 more annotations...
  • the EU's recently imposed tariffs on steel pipe imports and the United States'
    consideration of restrictions on Chinese-made tyres.
  • Oftentimes you sense or perceive a hidden hand or the influence of the state
  • giving an unfair advantage
    • Christian Evertz
       
      Trading partners see an unfair advantage in the fact that the Chinese government controls Chiense trade
  • China would say 'look, we are a big, complex fast-growing economy with many
    issues and strains … you have got to give us time'.
    • Christian Evertz
       
      Trading partners show some understanding for China's protectionist measures since its vast economy is dependent on high growth which could be supported by growth in the domestic sector as well and not only in export industries
  • China must understand when we in Europe and elsewhere are being too hard done by
  • Christian Evertz
     
    This article talks about trade barriers imposed by China which cost its European trade partners over 20 bn Euros worth of trade.
    Lord Mandelson who is responsible for UK-Chinese trade advocates a more open Chinese trade system and seeks a meeting with China's Premier.
Christian Clausen

US dollar to continue to weaken in medium term - 0 views

  • start moving their money out of the safe haven (of the greenback) and into riskier, higher-yielding markets like emerging markets,
    • Jason Welker
       
      During recessions, investors want to put their money in safe investments, namely in US bonds and assets. When the global economy starts to recover, they take their money out of the US and put it into ther country's assets, this has major affects on the US$ exchange rates
  • “will not be as fast” in 2010 as this year unless the global economies recovered at a faster-than-expected rate
  • he ringgit has strengthened as much as 2% against the US dollar. It rose 0.4% to 3.4075 per dollar in mid-afternoon trade yesterday.
    • Jason Welker
       
      Strong Ringgit threatens Malaysia's export sector...
  • ...5 more annotations...
  • demand is slowly returning
  • equity
  • equity markets would be the first to react to a recovery, and credit markets would follow suit
  • We expect the division, the products of which deal with money market and foreign exchange instruments, to continue to perform well as trade starts to make a comeback and foreign exchange requirements pick up
  • exporters and importers to pay greater attention to protecting the value of their foreign currency receivables and payables
  • Christian Clausen
     
    The US dollar will continue to weaken in the medium term as the risk appetite of investors increase with global economies on the mend, said OCBC Bank (M) Bhd head of global treasury Gan Kok Kim.

    - Taken
Benji Bucket

EU Hits China, Brazil, Armenia With 5-Year Tax on Aluminum Foil - Bloomberg.com - 0 views

  • The European Union imposed five- year tariffs on aluminum foil from China,
    Brazil and Armenia to help EU producers including Poland’s Grupa Kety SA compete against cheaper imports
    • Jason Welker
       
      Classic tariff diagram here, straight forward, simple, easy to draw and analyze... SEe if you can challenge yourself by including a discussion on exchange rates.
  • The
    duties against China, Brazil and Armenia are the outcome of a probe
    opened

    in


     

    July
    2008

    after
  • dumping
  • ...6 more annotations...
  • Greece’s Symetal Aluminium Foil Industry SA and
  • Bulgaria’s Alcomet suffered “material injury
  • 17.6 percent on Companhia Brasileira de Aluminio and any other Brazilian
    exporters, 13.4 percent on Armenia’s Rusal-Armenal and any fellow exporters and
    as much as 30 percent on Chinese manufacturers
  • trade protection
  • China, Brazil and Armenia increased their combined share of the EU market for
    the product to 49 percent in the 12 months through June 2008 from 14 percent in
    2005, according to the bloc.
  • China’s share rose to 30.7 percent from less than 1 percent in the period, while
    Brazil’s fell to 12.8 percent from 14.1 percent and Armenia’s grew to 5.3
    percent from zero, the EU said.
  • Benji Bucket
     
    The EU is practicing a protectionist policy, of taxing imports of Aluminium from China, Brazil and Armenia in order to help Greece and Bulgaria's Aluminium foil producers. These tarrifts will last 5 years, and is very damaging because of China's large market share.
  • Jason Welker
     
    Okay, I'm not terribly inspired by this article... but it could be a decent one if you just want to focus on the effects of protectionism, tariffs, etc...
alex han

channelnewsasia.com - Asian nations bear brunt of dollar slump - 1 views

  • The greenback's slide against Asian currencies is dealing a double whammy to the region's export-dependent economies, hitting their exports and eating away at their massive foreign exchange holdings.
    • Jason Welker
       
      Value of their official reserves falls... Dollar looks like a less attractive investment for foreign central banks. How might this affect future demand for the dollar? A weakening $ could cause a "flight" from the dollar among foreign governments and central banks and investors... This would spell bad news for Asian economies that depend on a strong dollar for export demand from the US!
  • The dollar has plunged about 15 per cent against a basket of six other major currencies from a peak earlier this year, and recently hit one-year lows against a batch of regional Asian currencies.

    • Jason Welker
       
      Bad news for Asian exporters! China's probably not worried though, since they peg the RMB to the $!
  • US officials ritually express their backing for a "strong dollar", but have done nothing to arrest its slide, which many see as necessary to reduce the big US trade deficit and support struggling American exporters.
    • Jason Welker
       
      Weak dollar is good for US business, HURRAY!
  • ...6 more annotations...
  • Facing a loss of competitiveness against China's exporters, several central banks in the region – mainly in Southeast Asia – have bought dollars in recent weeks to curb their currencies' ascent, traders say.
    • Jason Welker
       
      EXCELLENT! This is really great for an IB commentary, cause now countries that previously may have allowed their currency to float against a relatively strong dollar are now getting worried as the dollar falls so have chosen to intervene in the Forex markets, increasing demand for $s and thereby devaluing their own currencies to make sure they don't lose all their export business to china, which maintains their own RMB at an artificially low exchange rate.
  • "Every country has its national interests. It's in the interests of China to promote its exports."
    • Jason Welker
       
      You could say that about any major economy, however! Can all countries promote their exports through exchange rate manipulations? This only worsens global trade imbalances!
  • Virtually free credit in the United States and other major economies has fuelled a massive binge by investors on risky assets such as equities and commodities while leading to a sell-off of the dollar.
    • Jason Welker
       
      Oh great, more bubbles in the future! This is exactly what the world economy does NOT need, another round of irrational exuberance! But if interest rates are low and investors can borrow money cheap and put it into assets they predict will earn them high returns, then why buy US bonds? Demand for dollars will fall while investors re-allocate their capital into emerging markets and non-dollar denominated assets!
  • "Central banks in Asia and Latin America are worried about dollar weakness and are aggressively intervening to stop excessive currency appreciation."
    • Jason Welker
       
      Foreign exchange market intervention is becoming the "IN THING!" No one wants to have the strong currency, WHY?! Doesn't SOMEONE have to have a strong currency? I mean, weak currency is fun, but weak according to WHAT? Why does the US always have to have such the strong currency? I mean, we've got 10.2% unemployment now! If anyone needs jobs, it's American workers!
  • Some analysts see India's recent move to buy 200 tonnes of gold from the International Monetary Fund for 6.7 billion dollars as a clear sign that countries are losing confidence in the US currency.
    • Jason Welker
       
      This will increase supply of US$, further weakening it against other currencies. $6.7 billion is not really that much though, perhaps analysts are over-reacting to India's action.


  • "The dilemma for many countries is that tightening early may attract hot-money inflows as investors seek higher yields. Waiting, however, may trigger asset price inflation," said Lyons.
    • Jason Welker
       
      This may refer to tightening their own money supplies, which would increase demand for their currencies as foreign investors seek the higher interest rates... careful, remember, strong currency BAD, weak currency GOOD! (at least according to leaders who are interested in job creation at home)
Dom McNamee

Emerging nations taking up baton on China's yuan | Reuters - 1 views

  • rampant currency appreciation
    • Jason Welker
       
      Need more here... what is the context of this quote? highlight more!
  • chorus of protests against China's weak yuan.
  • disparity between fixed and floating exchange rates at the G20.
    • Jason Welker
       
      Good, read the section from CC on fixed vs floating rates.
  • ...6 more annotations...
  • What is a concern is China's fixed exchange rate
  • Either all countries should have a fixed exchange rate or all should have a floating exchange rate
    • Jason Welker
       
      What's the role of floating exchange rates between nations in achieving balanced current accounts?
  • rather pointing to the need for other major economies to work to maintain their currencies' value to avoid destabilizing the world economy.
    • Jason Welker
       
      Doesn't "maintaining" fixed exchange rates lead to less stable world economy?
  • "A stronger yuan is likely and hugely desirable over the medium term but for the time being, other emerging markets will probably remain frustrated,"
  • Brazil, whose exporters have warned publicly they are losing share to Chinese rivals, is saying what developed countries have said for years -- the yuan-dollar exchange rate is too weak and the yuan should be allowed to float more freely.
    • Jason Welker
       
      Third parties are angry about weak RMB
  • Most emerging currencies have gained this year due to huge inflows to financial markets and booming commodity price
    • Jason Welker
       
      Capital account!!! Increased foreign demand for domestic financial and real assets!
  • Dom McNamee
     
    This article is about the fixed exchange rate of the Chinese Yuan.
Maren Rackebrandt

Business Report - Trade surplus posted as exports rise 12.8% - 0 views

  • South Africa recorded a trade surplus of R3.87 billion
    • Jason Welker
       
      A good place for a definition. "trade surplus". Identify the current account, distinguish between current account and capital account. Define "surplus"
    • Jason Welker
       
      Hold on, this must be referring to ONE QUARTER's trade balance, because below it sounds like SA might actually still have an overall trade deficit, am I right?
  • South Africa recorded a
    trade surplus of R3.87 billion
    in September, data showed on Friday, as
    the local recession drove imports down, while economic recovery in overseas
    markets buoyed exports.
    • Jason Welker
       
      Perfect! This is great! Use this quote in your commentary.
  • Pressure on the trade balance has, however, eased this year as an economic
    recession has kept imports of machinery and other appliances low.
    • Jason Welker
       
      By "pressure on the trade balance" I suspect they're referring to the pressure that would have pushed S.A. towards a trade deficit. Since SA is importing less machinery due to the domestic recession, and recovery abroad has boosted exports, it has actually moved towards a surplus. Something to think about for your analysis though, is a trade surplus necessarily desirable for SA?
  • ...5 more annotations...
  • "It is certainly encouraging that the trade figures continue to show progress in
    the narrowing of the current account deficit,"
    • Jason Welker
       
      Here it sounds like SA has an overall trade deficit, so I'm guessing that above it refers to the latest quarter's figures, in which SA had a trade surplus.
  • "It is certainly a reflection of weakness locally resulting in weak imports and
    on the export side, it is a sign of maybe a slight recovery globally."
  • South Africa fell into recession in the first quarter of this year
    • Jason Welker
       
      How does a domestic recession affect demand for imports and therefore the current account? What about exchange rates? (relative incomes) Although keep in mind, SA is not the only country experiencing recession, so while domestic incomes have fallen, so have incomes among many of its trading partners. So the impact on exchange rates may not be so clear?
  • The current account deficit is seen narrowing to 4.9 percent of gross domestic
    product (GDP) in 2009, compared with 7.4 percent last year
    • Jason Welker
       
      OK! So that clears it up. SA still has a deficit, it's just NARROWING, meaning its latest quarters have posted trade surpluses. Could the weak currency be contributing to the more balanced trade data?
  • The trade data would normally have lifted the local currency, but the currency
    weakened to R7.76 against the dollar from R7.70 before the data was released at
    noon on Friday mainly because of the dollar's recovery.
    • Jason Welker
       
      This is excellent. Again, use this quote in your commentary. Explain why "The trade data would normally have lifted the local currency". And then evaluate the possible reasons why the currency has actually weakened against the dollar! There must be more complex determinants of exchange rates at play here beyond just the increase in exports from SA and the decrease in imports to SA.
  • Maren Rackebrandt
     
    Due to a recession in South Africa, prices have fallen and exports increased. On the other hand imports decreased. South Africa had a current account deficit, but is now driven towards a trade balance. Even though their currency should have appreciated, it actually depreciated compared to the dollar.
Laura Perez

German Exports Rose in September as Global Economy Strengthened - Bloomberg.com - 2 views

  • Sales abroad, adjusted for working days and seasonal
    changes, increased 3.8 percent from August, when they fell 2.8
    percent
    • Laura Perez
       
      What do they mean by 'adjusted for working days and seasonal changes'?
  • Germany emerged from recession in the second quarter and
    growth probably accelerated in the third as exports picked up
    and government stimulus measures bolstered domestic spending.
  • The euro’s 19 percent appreciation against the dollar since mid-
    February may undermine the recovery by making exports more
    expensive.
  • ...3 more annotations...
  • The exchange rate shouldn’t play a role in the coming
    months
  • “Exports are the growth driver and we believe that will
    continue into the fourth quarter. But if the euro strengthens
    further, and when the impact of the inventory cycle wears off,
    exports will feel the pinch.”
  • The Economy Ministry raised its outlook for the economy on
    Oct. 16, forecasting growth of about 1.2 percent in 2010 after a
    5 percent contraction this year.
  • Laura Perez
     
    Germany's rising exports has provided a boost in the German economy. However the appreciation of the euro against the dollar might counteract this effect and slow down the economic growth.
Jabbo G

Trade gap widens less than expected | Trade balance - 0 views

  • Australia's trade balance fell deeper in the red in September,
    • Jabbo G
       
      current account defecit right?
    • Jason Welker
       
      Yes, "in the red" means it has moved deeper into deficit. What are the causes of this deepening trade deficit?
  • as exports matched import growth.
  • Imports and exports both rose 5 per cent for the month,
    • Jason Welker
       
      If imports and exports are rising at the same rate, Australia's current account should remain where it is, neither moving towards surplus nor deficit.
  • ...5 more annotations...
  • "Given the Australian dollar was up 4.9 per cent in US dollar terms
    • Jabbo G
       
      should I draw 2 graphs, comparing the US and the AUS $ ?
    • Jason Welker
       
      YES. AUD is appreciating, the USD is depreciating. Try to identify the determinants of exchange rates that are causing these shifts.
  • Imports of intermediate and merchandise goods rose 10 per cent, while fuels rose 25 per cent.
    • Jason Welker
       
      Above it says imports and exports were both up 5%. How is the deficit growing?
  • September’s number was better than market expectations but showed Australia’s dependence on Chinese demand.
    • Jason Welker
       
      What does China demand from Australia? Finished goods and services or raw materials and minerals?
  • we will need to see a broader global recovery to see exports grow on a more sustained basis,
    • Jason Welker
       
      What is Australia's largest export to the rest of the world?
  • This is particularly true for non-resource exports that are battling weak non-Asia demand and headwinds from the strong currency.”
    • Jabbo G
       
      other currencies are weak compared to Australian $
      He is saying that australia needs to export more services, especially to non-asian countries.
      I don't know what's bad about trade with just one country?
    • Jason Welker
       
      Would you put all your eggs in one basket? If AU is dependent on CHINA for export revenues, and primarily only in the export of ONE commodity or one small category of commodities, it is running the risk of major falls in exports, thus AD and GDP, if China's demand for AU's output falls. Diversifying its trading partners and the types of goods and services its exports makes Australia's economy stronger and less likely to fall when one other country's growth slows.
  • Jabbo G
     
    This article talks about Australias trade defecit, it's strong currency and it's trade dependency on asia.
Laura Perez

allAfrica.com: Africa: Kagame Addresses China-Africa Summit (Page 1 of 1) - 1 views

  • the forum was an occasion for China and Africa to reflect together on the tremendous trade and investment opportunities available, and to take advantage of ongoing regional integration from which both China and Africa can benefit.
  • I am happy to note that advancing regional integration benefits Africa as well as our Chinese partners given the size of the combined markets, growth and attractive economic returns
  • trade between East African countries and China had grown by over 200 percent from 2007 to the present.
  • ...4 more annotations...
  • He said in Rwanda alone, business with China had quadrupled in the last four years.
  • To harness the vast regional potential for commerce and investment, we have identified modern infrastructure projects to connect East Africa via road, rail and the internet among others. Partnership is key to advancing on this front
    • Jason Welker
       
      This is sounding more and more like and economic development article, rather than a good one on international economics.
  • Direct Chinese investment in Africa soared from US$ 491m in 2003 to US$ 7.8bn last year. Trade between the two has increased tenfold since the start of the decade.
    • Jason Welker
       
      We learn about Foreign Direct Investment (FDI) in unit 5, Development. Like Andy Cunningham said last week, China's presence in Africa is everywhere. But this relates more to development than to intenrational!
  • Currently, China maintains trade with all 53 African states.
  • Laura Perez
     
    Africa's resource-rich continent has attracted China into expanding their trading and investment opportunities. The trade China has had between the East African countries has grown by over 200% from 2007. China is hoping to improve the lives of millions through this trade which they already maintain with all 53 African countries.
  • ...1 more comment...
  • Laura Perez
     
    Africa's resource-rich continent has attracted China into expanding their trading and investment opportunities. The trade China has had between the East African countries has grown by over 200% from 2007. China is hoping to improve the lives of millions through this trade which they already maintain with all 53 African countries.
  • Jason Welker
     
    I just don't see what you can do with this article. There are really very few connections to topics from the Unit four syllabus! Tariffs? Subsidies? Quotas? Balance of payments? Exchange rates? None of these topics are present here. FINE A BETTER ARTICLE PLEASE!
  • Laura Perez
     
    I know, I wasn't going to use that one ... Just had it for the time being.
Gabriel Martin

FT.com / China - China current account surplus set to fall - 1 views

  • China’s current account surplus will fall by almost half this year
    • Jason Welker
       
      A re-balancing of trade between China and its trading partners is occuring. Do you think this is because of rising demand in China for imports or due to a falling demand among its trading partners for China's output?
  • Barack Obama for renminbi appreciation.
    • Jason Welker
       
      Why are American politicians in favor of a strong RMB?
  • 9.8 per cent of gross domestic product last year to 5.6 per cent of GDP this year
    • Jason Welker
       
      I'm guessing this refers to China's trade surplus as a percentage of its GDP (or to America's trade deficit as a percentage of ITS GDP?!)
  • ...6 more annotations...
  • glut of liquidity in western financial markets that precipitated the global crisis
    • Jason Welker
       
      Glut means "shortage". This refers to the financial markets inability or unwillingness to lend to households and firms. When lending stops, so does investment and consumption, causing recession.
  • likely to encourage China to appreciate its currency to help global rebalancing.
  • the renminbi had depreciated by 7.6 per cent overall against its main trading partners since March as a result of its informal peg to the US dollar.
    • Jason Welker
       
      As the dollar weakens, so does the RMB (since it's "pegged" to the dollar). This really upsets china's OTHER trading partners, as it leads to further deficits on their current accounts with China.
  • The rebound in recent months had been fuelled by “very large” fiscal and monetary stimulus
    • Jason Welker
       
      You know what this means... think MACRO!
  • “The global credit crisis has in some ways been good for China because it knows it cannot depend on the drug of exports any more and has discovered the importance of domestic demand,” said Jim O’Neill,
    • Jason Welker
       
      You should get this: China's been an export-oriented economy for 30 years. In the future, it will depend more on domestic demand and investment for its macroeconomic stability. It can't count on foreign demand for its output forever!
  • Gabriel Martin
     
    China's current account surplus with the US is predicted to fal by next year mainly because of international pressure and because of the appreaciation of the renminbi
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