Friday, November 26, 2004

My "speculation" about the revaluation of Yuan

Yes, people are speculating more and more on the

appreciation of Yuan. Bankers and fund managers in
different organizations all believe that yuan will
appreciate in a short time. From the angle of the
reporters, we can see different speeches or viewpoints
from Chinese officials,and diffrent measures for them
to reduce the pressure on Yuan. But I do believe the
bankers should have some reason to do such
speculation. One of them, I think, is that U.S
dollar's devaluation has put great measure on Yuan.
There is an exaggerated news whose headline is "U.S.
dollar's devaluation equals with robbing money from
Chinese's porket". For instance, with the U.S.
dollar's devaluation, China's Foreign reserve, most of
which are in the currency of dollars, has devalued
about 10%. Also, People's Bank of China needs to buy
more gold from the international markets to maintain
the foreign reserve. But the gold price has been more
expensive, marching above 455 dollars per ounce this
week, the highest price in 16 years. I am not sure if
China can resist the pressure or not.

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