Dollar Gains as Obama expresses Optimism

The dollar strengthened against the euro after President Barack Obama expressed optimism that the U.S. will emerge from its recession “stronger than before.”

The greenback gained for a third day versus the yen as well in forex trading as Obama said the world’s largest economy “will recover” and the tools to revive growth were within reach. Japan’s currency fell for a sixth day against the euro, the longest stretch since April, after the Ministry of Finance said the trade deficit widened in January to the most since at least 1986. The dollar rose to $1.2816 per euro as of 1:40 p.m. in Tokyo from $1.2846 late yesterday in New York. The greenback climbed to 97.10 yen from 96.64 yen.

“The markets like the fact that Obama’s trying to tighten things up and striking an optimistic tone…that would be supportive of the dollar.”Obama, delivering his first address to a joint session of Congress, also said the credit crisis paralyzing the banking system must be fixed or “our recovery will be choked off before it even begins.”

”AIG is already seeking additional funds from the Government before its report due on nest Monday.

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FOREX-Daily Market Digest

Yen sees gain:
The yen gained in currency trading for a third day against the euro on speculation European banks will reveal increasing losses due to the financial crisis in the region.

Yen strengthened versus 13 of the 16 most-active currencies on concern stock declines will spur investors to sell higher-yielding assets they bought with funds from Japan. The euro traded near a 10-week low against the dollar. The Risk-averse sentiment is being seen as likely to persist. “The yen may be bought.” Traders noted demand for the yen increased after Asian equities fell. The Nikkei 225 Stock Average slipped 1.4 percent and the MSCI Asia- Pacific Index of regional shares weakened 1 percent, prompting investors to reduce holdings of higher-yielding assets.

AUD weakens:
Australia’s currency may slide to as low as 50 U.S. cents as the global recession can drive down commodity prices. The central bank may lower borrowing costs to a record. The global economic collapse, the weakness of commodity prices, the prospect of Australian interest rates going to 2 percent or less and a severe domestic recession suggest the Australian dollar could weaken sharply, accordingly to analysts.

BSE and NSE move upwards:
Indian shares turned positive after opening 1.1 percent lower on Wednesday as investors hunted for bargains in the battered market that had fallen 6.2 percent in the previous two days. Technically, the market had become oversold-so now it is rebounding, remarked an analyst here in Mumbai. By 10:05 a.m. (0435 GMT), the 30-share BSE index was up 0.38 percent at 9,069.26 points, with 21 components rising. The 50-share NSE index was up 0.47 percent at 2,783.60.

Current recession one of the worse:
Alan Greenspan, the former U.S. Federal Reserve Chairman on Tuesday said the current global recession will be the longest and deepest since the 1930s and more government rescue funds will be needed to stabilize the U.S. financial system. In a speech to the Economic Club of New York Greenspan said The U.S. Treasury's Troubled Asset Relief Program (TARP) designed to help bail out banks has been partially successful and that additional funds will be required to stabilize the American banking system and restore normal lending.

News compiled from the Reuters and Bloomberg.

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FOREX-Euro falls to 2-mth low vs. US dollar on rates,Yen deterioates

Euro Worsens Against Dollar,Yen:
The euro fell to a 10-week low against the dollar adding to concern financial turmoil in the region is worsening. The euro also weakened against 14 of the 16 major currencies on speculation its recent declines triggered the execution of automatic sell orders. Meanwhile the yen here also dropped to a five- week low from yesterday against the dollar after Japan’s Finance Minister said today he would resign after budget bills are passed in the nation’s parliament.


Report pushes euro further down:
The Moody’s research and risk analysis report aided push euro down below 1.27 and accelerated dollar gains across the board. The euro needs to find support at $1.2330, the weakest since April 2006, which it touched in October, according to analysts. The euro’s decline against the dollar and the yen accelerated after stop losses on investors’ long positions on the currency were activated.

Traders said a sudden bout of heavy selling had forced the euro lower, triggering a series of sell orders and sending it down about 1 percent to $1.2665, it’s lowest since early December U.S. markets were closed for a holiday on Monday, when the euro lost about half a percent against the dollar and 0.8 percent against the yen as European equities fell and concerns about western banks' exposure to problems in Eastern Europe weighed.

Japan’s Concern:
Japan’s Finance Minister’s resignation spurred growing concern over the world’s second-largest economy .The market sentiment is to short the dollar and long the yen, so there’s a bias to buy back the U.S. currency and sell Japan’s, with forecast predicting the yen may fall to 93 per dollar today. Japan’s benchmark index Nikkei fell to its lowest in more than two months as the stronger yen hurt exporters and investors await the U.S. automakers' plans. According to a Reuter’s poll, Confidence among Japanese manufacturers remained mired near record lows, as exports and output dived amid the global slump and deepening recession at home.

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FOREX-Top Headlines on Monday Morning

Yen Rises, South Korean Won drops to two month low:
The yen climbed to 91.65 against the dollar as of 2 p.m. in Tokyo from 91.93 late in New York on Feb. 13 in forex trading. It advanced to 116.92 per euro from 118.37. Japan’s currency gained 1.2 percent to 59.63 versus Australia’s dollar and rose 1.1 percent to 47.50 against New Zealand’s dollar. The U.S. dollar gained to $1.2756 per euro from $1.2862 in New York last week, and climbed to 1.1668 Swiss francs from 1.1590. The British pound fell 1 percent to $1.4214 and weakened 0.2 percent to 89.75 pence per euro.

The yen snapped two days of losses against the dollar from the Friday session last week.

South Korea’s won shed 11 percent this year, the biggest drop among the 10 most-traded Asian currencies outside Japan, on concern that a deepening global economic slump will discourage investors from buying emerging-market assets.
A forecast revealed the Korean economy will shrink 6 percent this year as the world recession takes a bigger toll on over-leveraged households and smaller companies than during the 1998 Asian crisis.

Geithner Pressed By G-7 to Push Ahead With Bank Bailout Plan:
Finance chiefs from the Group of Seven nations joined the chorus of U.S. investors and lawmakers pushing Treasury Secretary Timothy Geithner to move faster to fix the banking system. The G-7 repeated its traditional message that “excess volatility” and “disorderly movements” in exchange rates must be avoided. The group accounts for about two-thirds of the world economy composing of the U.S., Japan, Germany, U.K., Italy, Canada and France. The yen rose against the euro and the dollar after finance ministers from the Group of Seven nations said the “severe” global slump will persist for most of 2009 and Japan’s economy shrank by the most since 1974, spurring investors to sell riskier assets.

White House dampens stimulus expectations:
President Barack Obama's aides warned Americans on Sunday not to expect instant miracles from the $787 billion economic stimulus bill he will sign this week, but said it would help eventually. "The acceleration in job loss probably means that this economy is going to get worse before it gets better," he said. The Republicans kept up their criticism on the bill saying it is incredibly expensive. “It has hundreds of billions of dollars in projects which will not yield in jobs," said John McCain, whom Obama defeated in last year's presidential election.

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FOREX and Other Headlines on Friday Morning

Yen Falls on hope Risk Appetite Will Revive:
The yen dropped against the euro and the U.S. dollar as optimism about government efforts to revive global growth improved investors’ appetite for riskier assets, pushing up Asian stocks and Forex market for the first time this week. The yen also weakened against the Australian and New Zealand dollars after Australia’s Senate approved a 42 billion AUD ($28 billion) stimulus package aimed at ensuring the economy doesn’t enter its first recession in 18 years. The greenback fell for the first time in four days on speculation a U.S. report will show that confidence among consumers declined in February, adding to signs the recession in the world’s largest economy is worsening.

G7 Meeting:
Finance ministers and central bankers from the Group of Seven major industrial nations meet in Rome here today and tomorrow. They plan to discuss exchange-rate developments.

Indian shares rise:
Indian shares rose 1.8 percent on Friday as investors speculated on a fiscal stimulus package in an interim general budget on Monday and supported by firmer Asian markets. Traders said expectations an interim railway budget, scheduled to be presented to Parliament at 11 a.m. (0530 GMT), would propose lower freight rates also underpinned sentiment.

Stimulus Aims Two-Phase Jolt at U.S. With Tax Cuts, Spending:
The stimulus plan emerging from Congress may jolt the U.S. economy in successive waves: relief to cash-strapped consumers, businesses and states, then a job- creating lift from spending on roads, utilities and public transit. Economic activity begins to tick up in third quarter of 2009, but the biggest effect of the stimulus bill is being expected in 2010.The hope is, with the stimulus, that we actually stop losing jobs by the end of this year, marked an analyst. The stimulus bill contains about $54 billion to help states with expenses. The plan has more than $60 billion to increase unemployment benefits and a boost to food-stamp programs, housing assistance programs and other aid for the hardest-hit Americans.

Obama Pays Tribute to Abraham Lincoln:
The United States on Thursday 12th February, marked Lincoln's 200th birthday with ceremonies at the US Capitol in Washington and at historical sites across the country, including his presidential library in Springfield, Illinois and the Gettysburg battlefield in Pennsylvania. President Barack Obama often invokes the name and symbols of the assassinated president who ended slavery and brought the U.S. through the Civil War. Both men rose from the Illinois state legislature to the highest office in the land and both built reputations as skilled political orators.

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Asian Stocks Fall on Doubts U.S. Stimulus Will Revive Growth

Asian stocks fell for a fourth day, led by financial and consumer-related companies, on concern U.S. measures to alleviate the financial crisis won’t be enough to revive the world’s largest economy. The U.S. stimulus plans are still lacking in details,” remarked an analyst from China. “It’s still unclear how they are going to bailout the banks. The market had been awaiting the financial bailout plan with high hopes, but what was announced didn’t have much meat on the bone,” said a Tokyo-based strategist in an interview with Bloomberg Television.

The MSCI Asia Pacific Index fell 1.5 percent to 81.75 at 11:32 a.m. in Tokyo, with about three stocks advancing for each one that declined. The gauge has lost 8.8 percent this year, extending 2008’s record 43 percent, as the credit crisis triggered by the collapse of the U.S. housing market dragged the world’s biggest economies into recession.


The Nikkei 225 Stock Average slumped 1.7 percent, to 7,814.01, resuming trade following a holiday yesterday.

Indian shares started 0.6 percent lower on Thursday following losses in Asian markets on uncertainty about the global economic outlook.Top-listed Reliance Industries and outsourcer Infosys Technologies were the main losers.

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FOREX- Yen Rises on Speculation, Dollar Gains highest against Yen, Retreats shortly

Dollar hits one month high vs yen later retreats

The yen rose against the dollar on Monday with demand from Japanese exporters lending support after it earlier hit a one-month low as gains in stock markets pointed to an easing of risk aversion. The dollar hit a one-month high against the yen earlier as the Japanese currency carried over its weakness from Friday, when U.S. shares rallied even as data showed that U.S. job losses in January were the deepest in 34 years
But the dollar later shed its gains against the yen due to selling by Japanese exporters, traders said. The yen advanced versus 14 of the 16 most-active currencies today. Against the yen, Australia’s dollar fell 1.3 percent to 61.23, South Africa’s rand declined 1.3 percent to 9.4747 and New Zealand’s dollar weakened 1.5 percent to 48.24. The dollar fell 0.3 percent against the yen to 91.73 yen .The dollar earlier rose to 92.42 yen on trading platform EBS, its highest since early January. The euro rose 0.1 percent to $1.2946. Against the yen, the euro was 0.3 percent lower at 118.70 yen, having retreated from a three-week high of 119.99 yen hit on EBS earlier in the day. The pound fell for the first time in five days against the dollar after the Confederation of British Industry also said Prime Minister Gordon Brown’s government must act quickly to revive lending as businesses battle the worsening credit squeeze.

U.S. financial stability plan to be outlined on Tuesday

In the near term, currencies are seen likely to take their cues from how the stock market reacts to President Barack Obama's financial stability plan, to be outlined by Treasury Secretary Timothy Geithner in a speech on Tuesday. The stabilization steps were initially due to be unveiled on Monday today, but the Obama administration pushed back the announcement as it pressed lawmakers to settle their differences over a huge economic stimulus package. The dollar broke above the triangle pattern against the yen on technical charts late last week, suggesting it has more room to rise.

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Asian Currencies Climb This Week on Efforts to Revive Economies

An Asian currency gauge rose for a second week as policy makers stepped up efforts to revive economies reeling from the global recession, raising speculation overseas investors are returning to emerging markets.

The Philippine peso capped the biggest weekly advance in a month. India’s rupee had a second week of gains with an advance of 0.3 percent this week to 48.7250 versus the U.S. currency. Malaysia’s ringgit traded at a one-week high as regional stocks rallied. . Malaysia is prepared to take “radical” steps to boost the economy, the government said on Feb. 5, while the Indonesian rupiah rose 0.3 percent to 11,720 today, paring this week’s decline to 2.4 percent. Indonesia a day earlier cut interest rates for a third straight month. The peso climbed 0.5 percent yesterday to 47.202 per dollar, a weekly gain of 0.4 percent Taiwan will offer tax breaks and subsidized loans to lure local investors back from China, which is increasing export tax rebates for textiles. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, rose 0.4 percent for the week to 105.10. Elsewhere, The Thai baht fell 0.2 percent on the week to 35 per dollar and Vietnam’s dong was little changed at 17,485.

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World News and Currency Update

EUROPE

The euro traded near a two-month low against since yesterday the dollar on concern the economic slump in Eastern Europe will deepen the recession in the 16-nation currency bloc.The currency may weaken for a second day against the yen on speculation the European Central Bank will signal it plans to cut interest rates again this year, after leaving them unchanged at a meeting today. The Czech koruna approached a two-year low versus the dollar before a government report that may show the trade deficit widened to the most in four years. Russia’s ruble was near an 11-year low after Fitch cut the nation’s debt rating.

ASIA

Indonesia’s central bank is seeking to expand its $6 billion currency swap deal with Japan and add new agreements to bolster the rupiah after foreign-exchange reserves slumped by $10 billion since July.Indonesia, which has similar agreements with China and South Korea for $3 billion each, may also initiate talks with a fourth nation, central bank Governor said, without identifying the country. The rupiah, which fell 16 percent last year, the most in eight years, declined 1 percent to 11,788 against the dollar at 10:19 a.m. in Jakarta.

US
Years of deepening recession in the developed world gnawed at investors on Thursday, after glum earnings from U.S. corporate stalwarts such as Kraft Foods and as the Bank of England looked set to cut record low rates further.As governments worldwide seek measures to ease the pain from the worst financial crisis in decades, the U.S. Senate voted to soften a "Buy American" clause in a $900 billion stimulus plan after President Barack Obama voiced concerns it could spark a trade war.

Excerpts taken from Bloomberg.com.

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Currency Updates for the Day

US dollar
The dollar edged up against a basket of currencies in cautious trade on Wednesday before jobs data in the United States and interest rates decisions by central banks in Europe. The U.S. currency made up for some of its losses the previous day, when an unexpected rebound in housing data and hopes for fresh stimulative economic packages in the United States sapped investor demand for the dollar as a safe haven.
"Investors are basically looking to buy the less-risky yen against other currencies because they are still avoiding risks, though the dollar is the next beneficiary currency, underpinned by prospects for economic stimulus plans," said an analyst at Shinkin Central Bank.
The dollar edged up 0.1 percent to 89.53 yen from late U.S. trading on Tuesday, but Japanese exporters selling of the U.S. currency capped its gains, dealers said. The euro slipped 0.3 percent to $1.2999 and was little changed at 116.34 yen, reported Reuters.

AUD & NZD
Bloomberg reported the Australian and New Zealand dollars rose for a second day as regional stocks gained and government spending worldwide boosted investor appetite for higher-yielding assets. Australia’s currency climbed the most in seven days after a government report showed December retail sales posted the biggest gain in more than eight years. The government yesterday announced a A$42 billion ($27.2 billion) spending package and the central bank cut interest rates to the lowest since 1964 to help the economy avoid a recession.

EURO
The euro fell toward an eight-week low against the dollar before a report that may show retail sales slid for a seventh month, supporting the case for the European Central Bank to cut interest rates.

POUND
The British pound weakened versus the greenback on concern an industry report will show U.K. services shrank at close to the fastest pace in 12 years. The yen may gain for a fifth day versus the dollar on speculation widening credit-market losses will erode corporate earnings, prompting investors to sell higher-yielding assets financed in Japan.

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Yen,AUD,Rupee and Crude Oil Update

YEN
The yen fell, ending three days of gains versus the dollar and euro, after the Bank of Japan said it will buy 1 trillion yen ($11.1 billion) of shares held by financial companies, reviving demand for higher-yielding assets. Japan’s currency dropped from near a one-week high versus the greenback after the central bank said in a statement it will purchase the equities through April 2010 to boost the capital of financial institutions.

AUD
The Australian and New Zealand dollars also ended a three-day losing streak against the yen after the Australian government said it will spend 42 billion AUD ($26.8 billion) to help prevent the economy entering a recession. The Australian dollar gained after the central bank cut interest rates to the lowest since 1964 and the government announced a stimulus package to avoid a recession. New Zealand’s currency rose from near a six-year low.


RUPEE
India’s rupee strengthened the most in a week even as Asian stock gains tempered speculation overseas funds will increase equity sales. The rupee climbed as much as 0.4 percent to 48.7325 a dollar, the strongest intraday since Jan. 19, before trading at 48.775 as of 10:16 a.m. in Mumbai, according to data compiled by Bloomberg. All 10 most-active Asian currencies outside Japan strengthened.

OPEC
Crude oil rose in New York on speculation that OPEC, led by Saudi Arabia, cut its output in January to avoid a supply glut and bolster prices. Production from the Organization of Petroleum Exporting Countries averaged 28.565 million barrels a day last month, down 3.5 percent from December, according to a Bloomberg News survey of oil companies, producers and analysts. A government report yesterday showed U.S. consumer spending fell in December for a record sixth consecutive month, cutting fuel consumption.

The above is compiled news excerpts from Bloomberg.com.

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Japan sees investment opportunities in Asia, US

Japanese companies see plenty of opportunities to make acquisitions and investments in Asia and in environmental business in the United States, the Japan External Trade Organisation JETRO said on Friday.But the strong yen and credit crunch mean investment into Japan is likely to continue falling, Yasuo Hayashi, chairman and CEO of JETRO, which promotes trade and investment between Japan and the rest of the world, told Reuters.Here's the compiled news excerpt from Forexpros.com.
Hayashi said India would offer major investment opportunities because the authorities lacked basic infrastructure.

Japanese companies were also well placed to pick up investment projects in China, especially in the environment sector, he said in an interview.
"Japanese business is looking very eagerly at business in China and sales to China of environmental equipment," he said.

Even in the United States there were opportunities, despite the economic crisis, because the new administration of President Barack Obama wanted to invest in the environment sector, an area of expertise for Japanese firms, he said.

Japanese companies will also look for investment opportunities in Southeast Asia, including plans to construct an industrial corridor linking India and Vietnam, and in commodities-rich countries in Latin America and Africa seeking to develop their resources, he said.
The long-term approach of Japanese business meant it was well placed to exploit opportunities even when commodities and energy prices were low, he said.

"For companies that are cash-rich, strong and able, now is a good opportunity," he said.Because many Japanese companies have relatively strong balance sheets after restructuring following Japan's financial crisis, they are well placed to make foreign acquisitions as well as investments, he said."Many find it a good opportunity to purchase good foreign companies which are in trouble at a reasonable price," he said.

As a result, Japanese foreign direct investment (FDI), which fell 4.7 percent year-on-year in the first 11 months of 2008 to 4.48 trillion yen, could increase this year, he said.
But FDI into Japan would continue to decline, after falling 13.5 percent in the first 11 month of 2008 to 6.43 trillion yen, reducing the outstanding stock of inward investment in the country.Hayashi said investment to Japan was falling because the financial crisis made it difficult for investors to raise capital and the strength of the yen was also a deterrent.

The poor state of the Japanese economy, which suffered a record 9.6 percent fall in industrial output in December, also discouraged inward investment, he said.

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World crises are deepening

Somber figures from Japan,the US and other parts indicate World crisis are deepening. While Japan sank deeper into recession with industrial output tumbling and inflation slipping to almost zero, key U.S. data later on Friday is also expected to mirror the worsening global financial crisis.Here are news excerpts from Forexpros.com.

Japanese economy worsening:
Japan's industrial production fell a record 9.6 percent in December, while annual core inflation slowed to a mere 0.2 percent. Rising unemployment, slowing household spending and no improvement in the industrial outlook added to fears that Japan was flirting with deflation and would post a horror GDP figure in February if exports do not bail it out. Wider Asian stocks were down 1.1 percent, the first daily drop in a week. Those falls followed similar declines on Wall Street after record monthly U.S. unemployment figures.Japanese companies including the Toyota Motor Corp, Sony Corp along with rival Nintendo Co, Ford Motor Co and Eastman Kodak Co, provided daily evidence of how deeply the global crisis was biting, costing governments trillions of dollars and threatening millions of jobs in the company.

More bad news is expected in the United States on Friday:
Economists think the U.S. Commerce Department will say gross domestic product, the broadest measure of U.S. economic activity, shrank at an annualized 5.4 percent in the fourth quarter even as the recession in the US is getting hold. As more jobs and company wealth were lost, Obama railed against "shameful" Wall St bonuses paid to executives at a time when taxpayer money was being used to shore up the crumbling financial system. Four U.S. airlines, led by Continental Airlines Inc, also posted losses, while Boeing Co shares fell 5.9 percent after it said it planned 10,000 job cuts

The picture in Europe is hardly any sunnier:
German unemployment rose almost twice as much as expected in January, euro zone economic sentiment hit a new low, while hundreds of thousands of French workers staged a nationwide strike demanding more was done to protect jobs and wages.

Little appetite:
Australian private sector credit shrank in December for the first time since 1992 as foreign banks cut lending to local companies.
Reserve Bank of Australia figures showed that total credit fell 0.3 percent in December, well below a forecast 0.5 percent rise, fuelling expectations the RBA would announce another hefty interest rate cut next week. Across the Tasman Sea, the once-favored New Zealand dollar fell to another six-year low after the central bank said interest rates would likely have to be cut further, a day after the benchmark rate was slashed by 150 basis points.

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Intraday Currency Pair Update

Dear traders
Here’s the daily intraday Update for EUR/USD, EUR/GBP and GBP/ USD for Thursday 29th January, 2009 from AVAFX.

EUR/USD intraday: the downside prevails.
Pivot: 1.3210.
Our Preference: SHORT positions @ 1.32 with 1.304 & 1.2975 in sight.
Alternative scenario: The upside breakout of 1.321 will open the way to 1.333 & 1.345.
Comment: the pair has broken below its ST bullish channel lower boundary and remains under pressure, the RSI is turning down.
Trend: ST Ltd Upside; MT Bearish
Key levels Comment
1.345** Intraday resistance
1.333** Intraday resistance
1.321*** Intraday pivot point
1.311 Last
1.304*** Intraday support
1.2975** Intraday support
1.29*** Intraday support


EUR/GBP intraday: rebound expected.
Pivot: 0.92
Our preference: Long positions above 0.92 with targets @ 0.9315 & 0.938 in extension.
Alternative scenario: Below 0.92 look for further downside with 0.9125 & 0.905 as targets.
Comment: the pair is breaking above its declining trend line, the RSI is on the upside.

GBP/USD intraday: under pressure.
Pivot: 1.4255.
Our Preference: SHORT positions @ 1.4245 with targets @ 1.4015 & 1.39.
Alternative scenario: The upside penetration of 1.4255 will call for 1.4375 & 1.455.
Comment: the pair stands within a ST bearish channel, the RSI is on the downside.
Trend: ST Consolidation; MT Bearish
Key levels Comment
1.455** Intraday resistance
1.4375** Intraday resistance
1.4255** Intraday pivot point
1.4129 Last
1.4015*** Intraday support
1.39** Intraday support
1.375*** Intraday support


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Emerging countries currencies can continue to lose on risk

Emerging-market currencies will extend losses in the first quarter as investors’ appetite for risk worsens amid the global recession, according to Brown Brothers Harriman & Co. in New York,reported Bloomberg.com.
“Markets are only now beginning to fully appreciate the heightened risks to the global economic outlook and emerging markets remain vulnerable to class-wide waves of selling,” according to a weekly outlook report from Brown Brothers issued yesterday. “We remain most negative on emerging Europe, Middle East and African currencies due to poor fundamentals and are most constructive on Asian currencies in this environment.”
Investors should continue to buy dollars on dips against emerging-market currencies, the report said.
China on the other hand refuted U.S. President Barack Obama’s claims that China is manipulating its currency because economic conditions for the Yuan to gain “don’t exist".
The global recession has narrowed China’s trade surplus in the past few months and reduced inflows of dollars, cooling demand for the nation’s currency, Hua, chief economist at China Construction Bank Corp and formerly a senior economist at the World Bank, said in a telephone interview. China Construction is the nation’s second-largest lender.
“Naturally the conditions for the Yuan’s appreciation don’t exist any more,” he said. “The Yuan can’t be strong also because the dollar has much strengthened versus other currencies in the past few months.”
The new U.S. administration believes China is “manipulating” its currency, Timothy Geithner, Obama’s nominee for Treasury secretary, told lawmakers yesterday. The Yuan’s appreciation halted in July, after the currency gained 21 percent since a dollar peg was scrapped in July 2005.“I was very disappointed and surprised at the remarks,” Hua said. “We are concerned about rising trade protectionism in the U.S.”

China’s currency fell 0.08 percent to 6.8429 per dollar as of 1:08 p.m. in Shanghai, from 6.8371 yesterday, according to the China Foreign Exchange Trade System.

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