A triple whammy for China

Nov. 26 (Bloomberg) -- China’s foreign-exchange reserves face a “triple whammy” as inflation, oversupply and the “inevitable” decline of the dollar threaten to erode the value of its holdings of U.S. Treasuries, said Yu Yongding, a former adviser to the Chinese central bank.
China needs to divert its trade and investment surpluses away from U.S. debt if it is unable to reduce them, Yu, a member of the central bank’s monetary policy committee from 2004 to 2006, said in a speech in Melbourne last night. The nation, with the world’s largest foreign-exchange reserves of $2.3 trillion, is the U.S.’s biggest creditor, holding $798.9 billion of Treasuries as of September.
“Capital losses -- let alone obtaining decent returns -- seem inevitable,” said Yu, a member of the Chinese Academy of Social Sciences. “There is no question whatsoever that the U.S. dollar will go south, which started in April 2002 and, after a short interval, restarted in March 2009.” --

Dubai fallout

Nov. 27 (Bloomberg) -- Dubai’s debt woes may worsen to become a “major sovereign default” that roils developing nations and cuts off capital flows to emerging markets, Bank of America Corp. said.

European business confidence

Nov. 27 (Bloomberg) -- European confidence in the economic outlook improved in November to the highest since the collapse of Lehman Brothers Holdings Inc., suggesting the recovery in the 16-member euro region is gathering strength.
An index of executive and consumer sentiment rose for an eighth straight month to 88.8 from 86.1 in October, the European Commission in Brussels said today. That was the highest since September 2008 and above the 88 projected by economists, according to the median of 27 forecasts in a Bloomberg survey..--

Yen high -- dollar low

Nov. 27 (Bloomberg) -- The yen strengthened to a 14-year high against the dollar, climbing past 85 to the greenback and prompting speculation Japan will intervene to halt gains in the currency that are threatening the nation’s export-led recovery.

Dollar continues its slide

November 26, 2009 NEW YORK (AP) - The safe-haven dollar slid to a 15-month low against the euro, was within striking distance of 14-year lows versus the yen and dipped below parity against the Swiss franc Wednesday as markets absorbed the Federal Reserve's indication that interest rates will remain at super-low levels for a while and it was not overly concerned by the U.S. currency's decline.
Against a basket of six currencies including the euro, yen and franc, the dollar fell as low as 74.245, its weakest point since August 2008 and its steepest one-day drop since July 31, said Joseph Trevisani, chief market analyst at FXSolutions.
The 16-nation euro climbed as high as $1.5142 Wednesday, its strongest level since August 2008. In late New York trading, it read $1.5139 from $1.4975 late Tuesday. --