China: May allow Yuan options trading to help banks and companies protect their earnings from swings in foreign exchange rates, according to four people with knowledge of the plan. The State Administration of Foreign Exchange, the nation's currency regulator, has asked for some banks' opinions on the issue, according to the people, who asked not to be identified because the plan hasn't been announced. Trading may start in two months, two of the people said. Options give the buyer the right, not the obligation, to buy or sell the currency at a specific price on a specific date. (Source: Bloomberg)
China: Reserve ratio hike extended for three months
A selective increase in required reserves for Chinese banks that was due to expire this week will be extended for another three months. The move affects six of the country’s biggest lenders. With the extension of the selective process, the required reserve ratio will stand at a record high of 19% for the country’s biggest banks. The decision to extend the selective reserve requirement increase will lock up about RMB180bn in deposits that the banks would otherwise have had available to lend. (StarBiz)
China: Pledges to tackle inflation, growth model
China’s leaders pledged to accelerate a shift in the nation’s growth model in 2011 and also focus on stabilizing prices after an annual meeting in Beijing to set economic policy guidelines. The state-run Xinhua News Agency reported on the outcome of the so-called Central Economic Work Conference, attended by President Hu Jintao and Premier Wen Jiabao. Its initial accounts didn’t give any specific targets for growth, inflation or lending. The government reiterated its intention to keep the currency stable. (Bloomberg)
China: Increases banks’ reserve ratios to cool prices
China ordered lenders to park more money with the central bank for the third time in five weeks to counter the threat from inflation. Reserve requirements will increase 50 basis points starting 20 Dec, the People’s Bank of China said. (Bloomberg)
US: Budget deficit widens as spending increases
The US government posted a wider budget deficit in November as spending swelled compared with the same time last year when a shift in the timing of payments for programs like Medicare and Social Security damped outlays. The deficit was USD150.4bn last month, exceeding the median estimate of economists surveyed, compared with USD120.3bn in November 2009, according to the Treasury Department’s budget statement released in Washington. (Bloomberg)
US: Confidence rises to a six-month high
Confidence among US consumers increased in December to a six-month high, coinciding with stronger holiday sales that show the economy is gathering speed. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 74.2 from 71.6 at the end of November. A Commerce Department report showed the US trade deficit shrank more than the forecast in October to USD38.7bn as growing economies overseas propelled exports to a two-year high. (Bloomberg)
US: Retail sales probably climbed in November
Retail sales probably climbed in November for a fifth consecutive month as Americans began their holiday shopping, showing consumers are playing a bigger role in the US recovery, economists said before a report this week. The projected 0.6% gain would follow a 1.2% October increase in purchases, according to the median of 62 estimates in a survey ahead of Commerce Department figures on 14 Dec. (Bloomberg)
E.U: ECB steps up bond purchases to fight market tensions. The Frankfurt-based ECB said it completed EUR 2.667b (USD 3.56b) of purchases after settling EUR 1.965b the previous week. That's the most in 23 weeks. (Source: Bloomberg)
U.K: Retailers see Christmas at least as good as 2009, BRC says. Almost two-thirds of U.K retailers predict Christmas sales will be the same or better than last year as stores step up discounts, the British Retail Consortium said. Thirty-five percent of retailers surveyed said sales will be better than last year, and 29% predicted they will be the same, while 36% expected sales to decrease, the London-based group said in an emailed statement. (Source: Bloomberg)
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