Posted by: samhenry | September 24, 2009

Following the Money for 9/24/2009: China’s Concerned about Western Currencies – Tighten Loan Policies

US and Chinese currencies

FOLLOWING THE MONEY

by SamHenry, editor

News about our financial security based on international agreements languishes in the financial news outlets or on the financial pages of major news operations.  But this will not last. The dollar is in deep trouble.  It is China’s primary concern:

True, Wen Jiabao, Chinese premier, has said of China’s dollar exposure that he is “definitely a little worried”.

More alarming are his actions as chairman of People’s Republic of China Capital Management Inc, with $2,100bn in assets, including $776bn in US Treasuries.  Will the issue of the US dollar reserve currency – that is as the currency against which all others are pegged come  up in Pittsburgh this week?

Ft.com

The issue of the dollar is scheduled to be discussed at the G20 meeting in Pittsburgh.

Also today the FT.com has reported:

The Australian dollar lost ground on Wednesday as concerns over Chinese bank lending knocked investor risk appetite.

Chinese equities dropped 5 per cent after reports that China’s two biggest state-owned commercial banks had put a lid on their 2009 lending targets.

China reportedly made the largest cut to its Treasury holdings in nine years in June, providing more circumstantial evidence that it is heading for the dollar exits slowly enough to avoid starting a stampede in which it, too, would be trampled.

The article continued with the Euro under fire:

“We now expect the pro-cyclical and commodity-linked currencies to come under renewed pressure against the dollar,” he said. “The recent build-up of long speculative positions in the euro and the Australian dollar suggest potential for a significant setback for these currencies.”

If you don’t visit the financial pages frequently, make it a habit. And this week, tune in to the happenings at the G20 meeting in Pittsburgh.

FT.comWorld Reserve Currency_Ojxdrd9m6Hyx

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