The wheels of tightening may be gaining momentum in China, after February’s higher than anticipated inflation release. High inflation leading to negative real deposit rates may entice investors to withdraw deposits and invest in more speculative assets, potentially spurring what is arguably already a bubble in the country’s housing sector. I believe that China has […]
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RMB
Since the start of this year I have been a proponent of the belief that China will once again begin to gradually appreciate their currency as exports recover, and inflation begins to creep back into the Chinese economy. As the chart below illustrates, investors in the CNY NDF market appear to share this view. But, […]
*FX data updated on March 27th 2008 Policy makers in China have not only continued their anti-inflationary rhetoric, but have started acting on it. We have seen the RMB reach several new highs verse the USD in recent days (7.01). Additionally, Chinese authorities have increased reserve requirements for the second time this year by 50bp […]
The US isn’t alone when it comes to inflationary concerns. Chinese consumer prices continue setting new interim highs, and it is not going unnoticed. February’s CPI number came in at 8.7%y/y vs. 7.1%y/y in January. It is important to keep in mind this reading includes the adverse effects of severe winter weather and the Chinese […]
I was asked my views on the Chinese inflation situation today and came up with this short piece: The Chinese growth story is now sharing the spotlight with the country’s mounting inflation concerns. In January consumer prices rose 7.1%y/y; to a level not seen since 1996, a point when China was in the midst of […]