News / Asia

    Chinese Yuan Dips After Geithner Testimony

    China's currency weakened slightly, despite tough talk by U.S. officials on Beijing's foreign exchange policy. Some financial analysts expect a round of market intervention by Asian central banks to keep their currencies from rising.

    The Chinese central bank set a new high exchange rate for the yuan against the dollar Friday, a day after U.S. lawmakers and Treasury Secretary Timothy Geithner sharpened criticism of its foreign exchange policy.

    Even so, the yuan weakened slightly against the dollar.

    The yuan is about 1 percent stronger than it was in June, when Beijing eased its strict peg to the dollar. Most of the gain came this month, ahead of U.S. congressional hearings on China's exchange rate policy.

    Thio Chin Loo is an Asian currency strategist at BNP Paribas in Singapore. Despite the slide Friday, Thio thinks Beijing will let the yuan strengthen further.

    "It might slow from the pace we had this week but directionally, yes, it's still heading up," said Thio.

    But Geithner says this managed appreciation is too slow. China only allows the yuan to move half a percent daily.

    "China is running a set of policies designed to keep the currency undervalued. They are moving to let it rise but not that very quickly. Not very much either. The impact of that has the effect of providing a relative disadvantage to products that compete with products the Chinese make," he said.

    Some U.S. lawmakers call for punitive measures against China, the United States' second largest trading partner, such as higher tariffs on its exports. Many economists and business people around the world say the yuan is undervalued by as much as 30 percent.

    With elections in November, political analysts say there is pressure on Congress for a tougher stance partly to allay concerns about the weak U.S. economy. Artificially cheap Chinese exports have been blamed for record U.S. trade deficits, which have allowed Beijing to accumulate hundreds of billions of U.S. dollars in reserves.

    But China resists pressure to let the yuan appreciate.

    Foreign Ministry spokeswoman Jiang Yu said Thursday the yuan's exchange rate is not the answer to U.S. trade deficits and unemployment.

    Here in Asia, the yuan's exchange rate causes problems for China's export competitors. Strong capital inflows, including Chinese investments, are pushing up the value of many Asian currencies.

    On Wednesday, the Japanese central bank bought dollars to weaken the yen, which had reached 15-year highs against the dollar. The move came after China aggressively bought Japanese government bonds, helping lift the yen's value.

    China also has bought record amounts of South Korean government debt, pushing the won up 3 percent against the dollar this month.

    Mark Walton is a senior economist at the investment bank CLSA Asia Pacific Markets in Hong Kong. He says as Asia braces for a slower global economy next year, central banks, including those in Taiwan and South Korea, will try to keep currencies from strengthening.

    "They would be as active in the currency market as they have ever been," he said.

    If they do, China analyst Gordon Chang says it would compound the challenge for the U.S.

    "What I'm really afraid is that because of China's fixing the value of their currency, the Japanese are doing the same, other Asian nations are going to do the same and it's not inconceivable that we could see the end of the free-floating exchange rates. The next trade war could be over currencies," said Chang.

    Despite Tokyo's intervention this week, the yen held steady Friday around 85.80 to the dollar. The government has indicated it might buy dollars again if the yen continues to strengthen.

    Japanese Prime Minister Naoto Kan and President Obama are expected to discuss the yen when they meet next week (September 23) in New York.

    You May Like

    Can EU Survive a Brexit?

    Across Europe politicians are asking if the British vote to leave the European Union will set in motion dynamics that will see other member states leave too

    Video Entrepreneurs Tackle Sexual Harassment, Rural Health Care at Global Summit

    VOA talks to enterprising business people from India, Nigeria, Myanmar about their programs to help their respective countries overcome obstacles

    Key African Anti-Venom About to Permanently Run Out

    The tale of Fav-Afrique’s demise is a complicated one that reflects a deeper crisis brewing in global public health

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Britain’s Vote to Leave EU Sends Shockwaves Through Global Marketsi
    X
    June 24, 2016 10:43 AM
    Britain’s historic decision to leave the European Union is sending shockwaves through global markets. Markets from Tokyo to Europe tumbled Friday under the uncertainty the ballot brings, while regional leaders in Asia took steps to limit the possible fallout. VOA’s Bill Ide has more from Beijing.
    Video

    Video Britain’s Vote to Leave EU Sends Shockwaves Through Global Markets

    Britain’s historic decision to leave the European Union is sending shockwaves through global markets. Markets from Tokyo to Europe tumbled Friday under the uncertainty the ballot brings, while regional leaders in Asia took steps to limit the possible fallout. VOA’s Bill Ide has more from Beijing.
    Video

    Video Tunisian Fishing Town Searches for Jobs, Local Development Solutions

    As the European Union tries to come to grips with its migrant crisis, some newcomers are leaving voluntarily. But those returning to their home countries face an uncertain future.  Five years after Tunisia's revolution, the tiny North African country is struggling with unrest, soaring unemployment and plummeting growth. From the southern Tunisian fishing town of Zarzis, Lisa Bryant takes a look for VOA at a search for local solutions.
    Video

    Video 'American Troops' in Russia Despite Tensions

    Historic battle re-enactment is a niche hobby with a fair number of adherents in Russia where past military victories are played-up by the Kremlin as a show of national strength. But, one group of World War II re-enactors in Moscow has the rare distinction of choosing to play western ally troops. VOA's Daniel Schearf explains.
    Video

    Video Experts: Very Few Killed in US Gun Violence Are Victims of Mass Shootings

    The deadly shooting at a Florida nightclub has reignited the debate in the U.S. over gun control. Although Congress doesn't provide government health agencies funds to study gun violence, public health experts say private research has helped them learn some things about the issue. VOA's Carol Pearson reports.
    Video

    Video Trump Unleashes Broadside Against Clinton to Try to Ease GOP Doubts

    Recent public opinion polls show Republican Donald Trump slipping behind Democrat Hillary Clinton in the presidential election matchup for November. Trump trails her both in fundraising and campaign organization, but he's intensifying his attacks on the former secretary of state. VOA National Correspondent Jim Malone reports.
    Video

    Video Muslim American Mayor Calls for Tolerance

    Syrian-born Mohamed Khairullah describes himself as "an American mayor who happens to be Muslim." As the three-term mayor of Prospect Park, New Jersey, he believes his town of 6,000 is an example of how ethnicity and religious beliefs should not determine a community's leadership. Ramon Taylor has this report from Prospect Park.
    Video

    Video Internal Rifts Over Syria Policy Could Be Headache for Next US President

    With the Obama administration showing little outward enthusiasm for adopting a more robust Syria policy, there is a strong likelihood that the internal discontent expressed by State Department employees will roll over to the next administration. VOA State Department correspondent Pam Dockins reports.
    Video

    Video Senegal to Park Colorful ‘Cars Rapide’ Permanently

    Brightly painted cars rapide are a hallmark of Dakar, offering residents a cheap way to get around the capital city since 1976. But the privately owned minibuses are scheduled to be parked for good in late 2018, as Ricci Shryock reports for VOA.
    Video

    Video Florida Gets $1 Million in Emergency Government Funding for Orlando

    The U.S. government has granted $1 million in emergency funding to the state of Florida to cover the costs linked to the June 12 massacre in Orlando. U.S. Attorney General Loretta Lynch announced the grant Tuesday in Orlando, where she met with survivors of the shooting attack that killed 49 people. Zlatica Hoke reports.
    Video

    Video How to Print Impossible Shapes with Metal

    3-D printing with metals is rapidly becoming more advanced. As printers become more affordable, the industry is partnering with universities to refine processes for manufacturing previously impossible things. A new 3-D printing lab aims to bring the new technology closer to everyday use. VOA's George Putic reports.
    Video

    Video Big Somali Community in Minnesota Observes Muslim Religious Feast

    Ramadan is widely observed in the north central US state of Minnesota, which a large Muslim community calls home. VOA Somali service reporter Mohmud Masadde files this report from Minneapolis, the state's biggest city.
    Video

    Video During Ramadan, Faith and Football Converge in Lebanon’s Megadome

    In Beirut, a group of young entrepreneurs has combined its Muslim faith and love of football to create the city's newest landmark: a large, Ramadan-ready dome primed for one of the biggest football (soccer) tournaments in the world. But as the faithful embrace the communal spirit of Islam’s holy month, it is not just those breaking their fasts that are welcome.

    Special Report

    Adrift The Invisible African Diaspora