| G7: Canada Central Bank: G7 Stresses Need For Broad Yuan Moves
ESSEN, Germany -(Dow Jones)- The closing communique from the finance ministers of the Group of Seven leading industrialized countries calls for China's yuan to move broadly, not just against the U.S. dollar, Bank of Canada Governor David Dodge said Saturday. "I think in respect to China we mainly think of the RMB-dollar relationship but of course other currencies are moving around against the dollar," he told reporters. "So for China as a whole, what's most important is the change in their effective exchange rate." The RMB is another name for the yuan, China's currency. In the communique, the G7 said it was desirable for China's effective exchange rate to move. This is in contrast to the previous two G7 meetings that called upon China to make the yuan more flexible. When asked about the change in wording, Canada's G7 Deputy Mark Carney said the key was not the explicit reference to exchange rates, but the emphasis on effective exchange rates, which is how one currency moves against all others.
US bonds, dollar gain after jobs data, gold falls
NEW YORK (Reuters) - U.S. Treasury bond prices rose on Friday after government data showed moderate job creation, suggesting the Federal Reserve will keep interest rates steady for some time. The dollar gained as investors focused on upward revisions in the jobs numbers for previous months, while U.S. stocks ended mixed. The Labor Department's nonfarm payrolls report showed that the U.S. economy created 111,000 new jobs in January -- below forecasts for 149,000. But the government also revised upward estimates of job growth in previous month. Overall, the report was in line with a view that the U.S. economy is strong enough to warrant holding the benchmark fed funds rate at 5.25 percent for some months to come. "The headline (jobs number) was lower than expected, but it's all about the revisions as usual.
Travel agents warned on RMB trading
A Mainland Affairs Council (MAC) official warned Taiwan's local travel agency operators and tour guides yesterday from dealing in yuan, the Chinese currency, also known as the renminbi (RMB). MAC Vice Chairman Liu Teh-hsun said it is illegal under the nation's currency law to buy or sell Chinese yuan privately and called for travel agency operators and tour guides to avoid such practices, especially now that the Chinese New Year holiday is approaching and transactions in the Chinese currency is anticipated to increase sharply. Liu said the MAC will collaborate with the Tourism Bureau under the Ministry of Transportation and Communications to jointly control illegal transactions in Chinese yuan in order to prevent possible currency irregularities from occurring. Currently, only banking institutions, airports and seaports in the Taiwan-held outlying islands of Kinmen and Matsu are allowed to engage in exchanges of Chinese yuan, Liu said.
UPDATE: Currency Diversification May Not Be As Scary As Some Fear
NEW YORK (Dow Jones) -- As the world's currency reserves approach the $5 trillion mark, it's hardly surprising that talk of central banks moving out of dollars and into other currencies sends shivers across the foreign-exchange market. The U.S. dollar fell to a three-month low against the euro and a 19-month low versus the British pound last November after Chinese officials announced plans to diversify the world's most populous nation's trillion dollars worth of currency reserves. China wasn't the only country worried that its reserves were too concentrated on the U.S. currency, leaving it vulnerable in the event of a dollar rout. Banks from at least a dozen other countries, including Russia, Switzerland, Iran, Syria, Qatar, Venezuela and the United Arab Emirates, announced plans to cut their exposure to the dollar in favor of other currencies.
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