Asian News

[Ichiro]

9feb- Reuters-Euro climbs as markets price in ECB March rate hike
Thursday February 8, 4:38 pm ET

NEW YORK (Reuters) - The euro advanced against most currencies on Thursday after investors interpreted remarks from the head of the European Central Bank as signaling a rise in benchmark interest rates in March.


But the dollar did strengthen against the yen ahead of a meeting of finance ministers from the Group of Seven wealthiest nations, after earlier speculation that the yen's weakness might be a focus of the meeting had fueled a mild rally in the Japanese currency.

The focus of the day's trading was the euro after the ECB left rates unchanged at 3.5 percent as expected, but ECB President Jean-Claude Trichet repeated the phrase "strong vigilance" to describe how the bank will monitor euro zone inflation.

"Strong vigilance remains of the essence so as to ensure that risks to price stability over the medium term do not materialize," ECB President Jean-Claude Trichet told a news conference.

The ECB has used the word "vigilance" in its statements every month before the six rate increases delivered since December 2005. Asked if the markets should understand the phrase to mean a rate rise in March, Trichet said: "It speaks for itself."

for info:

http://biz.yahoo.com/rb/070208/markets_forex.html?.v=2

 

[Ichiro]

9feeb- AP-G-7 Finance Ministers to Meet in Germany
Thursday February 8, 2:16 pm ET
By Matt Moore, AP Business Writer
G-7 Finance Ministers to Focus on Hedge Funds, Currency Issues, Energy, Education at Meeting

FRANKFURT, Germany (AP) -- Finance ministers and central bankers from the world's seven richest nations are set to focus on hedge funds, foreign exchange issues, energy and education as they gather this weekend.

While initial talk ahead of the meeting has focused on European concerns that the yen, a driver of economic growth in Asia, has been weakening, a wider examination of foreign exchange rates and their effect on economies will likely result.

"The issue is a central element in G-7 talks," German Deputy Finance Minister Thomas Mirow said this week at a briefing on the two-day summit which starts Friday in the west German city of Essen.

The euro has hit new highs against the Japanese currency, to reach 158 yen. Japan's interest rates are at 0.25 percent, while rates in the euro-zone and Britain have steadily been raised.

The yen's weakness against the euro has caused some concern among EU finance ministers because it makes Japanese goods less expensive than those made by companies in the EU.

Mirow wouldn't confirm if the yen would be the dominant issue of the meeting, saying all currencies remained an issue and that "the yen is also an important currency, among others."

Japan's Vice Finance Minister Hideto Fujii said Thursday that he expected the finance and central banks chiefs from the Britain, Canada, France, Germany, Italy, Japan and the United States to discuss overall macroeconomic, financial, monetary and currency conditions, but not to zero in on the yen.

info:http://biz.yahoo.com/ap/070208/germany_g_7.html?.v=3

 

[Ichiro]

10feb- AP-Stocks Fall in Early Afternoon Trading-Friday February 9, 1:37 pm ET
By Joe Bel Bruno, AP Business Writer
Dow, Nasdaq Slide in Early Afternoon Trading As Investors Absorb Spike in Oil Prices

NEW YORK (AP) -- Wall Street extended its decline Thursday as investors glumly absorbed a spike in oil prices and comments from two Federal Reserve officials that unexpected economic growth could prompt an interest rate hike.



Stocks had spent most of the session in positive territory after Thursday's pullback made for fertile ground for bargain hunters. The markets also were boosted by analyst upgrades of the automobile sector, which sent Ford Motor Co. and General Motors Corp. higher.

However, investors began to sell after St. Louis Fed President William Poole and Dallas Fed President Richard Fisher both warned rates will go higher if inflation doesn't ebb. Wall Street has been looking for any clues about how central bankers are viewing the economy, and which way it might lead on interest rates this year.

Investors also digested a handful of e-rnings reports and watched the movements of crude oil, which crossed $60 per barrel for the first time since early January. Crude prices flirted with that psychological barrier for three straight days this week only to retreat.

"The market has been trading without a lot of economic information to this point but generally oil prices are providing somewhat of a headwind," said Lynn Reaser, chief economist with the investment strategies group at Bank of America.

In early afternoon trading, the Dow Jones industrial average fell 18.19, or 0.14 percent, at 12,619.44 after also pulling back on Thursday amid concerns about the housing market.

for info:

http://biz.yahoo.com/ap/070209/wall_street.html?.v=37

 

[Ichiro]

10-feb- AP-G-7 Meeting Focusing on Currency, Energy
Saturday February 10, 4:16 am ET
By Matt Moore, AP Business Writer
G-7 Communique to Say Euro Zone Contributing More to Global Growth; Talks With China Begin

ESSEN, Germany (AP) -- The finance ministers and central bankers of the world's seven wealthiest countries met with their counterparts from the world's fastest growing economies on Saturday as clues about the group's planned communique became more apparent.

French Finance Minister Thierry Breton said late Friday that the G-7 communique would likely feature a paragraph on foreign exchange issues, but would not single out one currency.

Breton said the G-7 would acknowledge the bigger role that the 13-country euro zone has played in driving world growth.

"We will all say that the euro zone contributes more to world growth than previously," Breton said, adding that the outlook for the global economy was positive.

Euro Group President Jean-Claude Juncker echoed those remarks on Saturday, telling reporters the euro-zone economy has been growing at a robust pace.

The prime minister of Luxembourg, Juncker leads the informal group of finance ministers from the 13 countries that share the euro.

for info:

http://biz.yahoo.com/ap/070210/germany_g_7.html?.v=3

 

[Ichiro]

10feb-Essen G7 communique similar to Singapore - source
Sat Feb 10, 2007 5:31am ET26


ESSEN, Germany, Feb 10 (Reuters) - The yen is not set to be cited explicitly in a communique to be issued from a meeting of G7 industrialised nations on Saturday, a G7 source said.

The source, speaking a few hours before the communique was due to be officially released, said the wording that financial markets are waiting for on exchange rates was expected to be similar to that used by the G7 in September in Singapore.

"The wording on exchange rates in the final communique will be similar to that used in Singapore," the G7 source told Reuters.


info:

http://yahoo.reuters.com/news/artic...2-10_10-31-12_L10569968&type=comktNews&rpc=44

 

[Ichiro]

10feb-WRAPUP 1-IMF and Germany upbeat on world economy in 2007
Fri Feb 9, 2007 6:11pm ET28

ESSEN, Germany, Feb 9 (Reuters) - Germany and the International Monetary Fund sounded an upbeat note on world economic growth on Friday, noting strength in Europe and Asia and a moderate slowing in the United States.

IMF Managing Director Rodrigo Rato, speaking to Reuters in Brussels, said the world economy was on course to grow by about 5 percent this year against 5.1 percent estimated for 2006.

"This means that the recovery is on track," he said during a pit-stop on his way to a meeting in Essen of the G7 group of rich industrial nations, currently chaired by Germany.

Rato said he expected continued strong growth in Europe and Asia and only a slight slowdown in the world's biggest economy, the United States. Last year the IMF forecast 2007 world growth could slow to 4.9 percent or less.


for info:
http://yahoo.reuters.com/news/artic...2-09_23-11-00_L09733891&type=comktNews&rpc=44

 

[Ichiro]

10feb- Reuters-Yen seen dodging G7 rebuke as talks enter last day
Saturday February 10, 3:57 am ET
By Hideyuki Sano

ESSEN, Germany (Reuters) - Japan's Finance Minister Koji Omi said on Saturday a slide in the value of the yen would not be singled out for criticism by the Group of Seven club of wealthy economic powers.

"I don't think the yen will be specifically mentioned in the statement," Omi told reporters as he headed to the opening sessions of the second day of talks among G7 finance ministers in the German industrial city of Essen.

The yen's decline has been in sharp focus in the run-up to the meetings that kicked off on Friday, with euro zone nations particularly worried that their exports will be hit hardest by the currency's fall to record lows versus the euro.

The Japanese currency is a key talking point at the meetings along with hedge fund regulation and expanding the group to include China and other emerging markets.

Omi's comments echoed those of his French counterpart Thierry Breton, who told a news conference late on Friday: "We never name a specific currency. Don't expect a specific paragraph on a specific currency."

U.S. Treasury Secretary Henry Paulson has given criticism of the yen short shrift, commenting that Japan's currency traded freely in the financial markets, unlike the Chinese yuan, which he wanted to see rising faster.

for info:

http://biz.yahoo.com/rb/070210/g7.html?.v=2

 

[Ichiro]

9feb- Daily FX-US Dollar - Hawkish Comments By Poole Keeps Dollar Supported
Friday February 9, 4:23 pm ET
By Richard Lee, Currency Analyst strategist@dailyfx.com

• US Dollar – Hawkish Comments By Poole Keeps Dollar Supported

US Dollar
Today was a perfect day to continue the dollar strength that had been seen over the past couple of sessions. Ahead of the looming G7 meeting this weekend, traders continued to bid the greenback higher against the majors whether on book squaring or profit taking. Sparking momentum in the morning were strongly hawkish comments from St. Louis Federal Reserve Bank President William Poole. Speaking to the AAIM Management Association today, Fed bank president Poole noted that inflationary pressures were expected to reside below the 2 percent comfort target instituted by the Federal Reserve. However, he quickly added that should pressures rise above and remain uncomfortably high, there would be no question to hiking rates further in curbing inflation that would be “unacceptable”. The words spoke loudly to market traders looking for further reasoning n bidding the dollar higher before the New York close. The comments rang even louder considering the dearth of US economic data that was present on the day and will likely play into Bernanke’s testimony to Congress next week. Incidentally, more Federal Reserve news contributed to market action later in the afternoon as press releases began to mount on the March 30th resignation of Governor Susan Bies. The longest tenured board member on the Federal Reserve, Susan Bies was noted as the central bank’s leading regulatory figure, backing recently hawkish decisions of the Fed. Now, her departure leaves two vacancies on the board and a world of possibilities as the current administration must find replacements in the near term. For hawks, this may deal a blow as she will not be attending the March meeting.


Japanese Yen
Finally the weekend has arrived and it seems that the markets are betting on the likelihood of a pass on any heated mentions of the Japanese yen. After a week long schedule of comments from central bankers and policy makers around the world, it seems that the market remains attentive of the meeting. However, the anxiety that we saw in the beginning of the week seems to have turned into sheer skepticism that any real changes will be enforced by the finance ministers in Essen. Comments by US Treasury Secretary Henry Paulson voiced today summarized the overall sentiment. Although trading near a trade weighted 20-year low, Paulson stated that “the yen is market determined” and is widely lower on the condition of the teetering economy. Nonetheless, the policy maker is expected to make heavy considerations by European officials this weekend in pressureing Japanese officials to counter the recent yen depreciation.

for info:

http://biz.yahoo.com/fxcm/070209/1171059853869.html?.v=1

 

[Ichiro]

10feb-Steinbrueck and Breton Ease Stance on the Yen at G-7 (Update2)

By Simon Kennedy and Mark Deen

Feb. 10 (Bloomberg) -- European finance ministers tempered their criticism of the yen's decline as officials from the Group of Seven met in Essen, Germany.

Germany's Peer Steinbrueck said the weaker yen hasn't hurt European exports and Thierry Breton of France said the Japanese currency wouldn't be cited as a problem when the G-7 ministers and central bankers release a statement after their talks today.

The European ministers had pushed the yen onto the G-7 meeting's agenda, saying its slide to a record low against the euro last month was at odds with the strength of Japan's economy and threatening their exports. U.S. Treasury Secretary Henry Paulson and Japanese Finance Minister Koji Omi, by contrast, suggested they weren't concerned.

``It looks like the Europeans saw the writing on the wall and sensed there was no way Paulson was going to attack a free- floating currency,'' said Derek Halpenny, a currency strategist in London at Bank of Tokyo-Mitsubishi UFJ Ltd.

The yen depreciated 5.3 percent against the dollar and 6.9 percent versus the euro in the past six months. It closed at 121.73 per dollar and 158.32 versus the euro in New York yesterday.

Falling Yen

Asked by reporters in Essen whether the falling yen had hampered German exports, Steinbrueck said yesterday: ``No, I don't think so; we had a very, very advantageous trade balance during all the past years,'' adding that that was also the case for other European countries.

Breton said yesterday the ``sensitivity'' of exchange-rate issues means the G-7 won't ``cite on individual currency'' in its statement, which is scheduled for release around 2:30 p.m. in Essen. Earlier today, Luxembourg Finance Minister Jean-Claude Juncker, one of the representatives of the 13-nation euro region, said he is not disappointed about the yen's likely absence from the communique.

Paulson reiterated his lack of concern with the slide in the Japanese currency, noting that its value is being set by markets and is in line with the performance of Japan's economy. ``It trades in a marketplace based on economic fundamentals,'' he said.

for info:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aGR.NaV0FVUU&refer=worldwide

 

[Ichiro]

10feb-Asian Currencies: Korea's Won Has Second Weekly Gain on Funds

By Yumi Teso and Jake Lee

Feb. 10 (Bloomberg) -- South Korea's won strengthened for a second week on speculation global investors will increase demand for the nation's shares.

The won this week advanced to a one-month high as stock exchange data showed investors based outside of South Korea had a fourth straight week of net equity purchases. That demand helped the benchmark Kospi index yesterday reach the highest since Jan. 3.

``There's still investor favor toward Asia and that includes South Korea, giving the currency a boost,'' said Katie Dean, a senior Asian economist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``We can see more funds going in and more currency gains.''

The won gained 0.3 percent this week to 934.60 against the dollar, according to Seoul Money Brokerage Services Ltd.

Global investors purchased $186.5 million more shares than they sold this week, according to stock exchange data. The Kospi index added 1 percent this week, a third weekly gain.

Taiwan's dollar had a weekly decline on speculation domestic investors are sending money abroad to receive higher yields.

Taiwan Outflows

Taiwan's benchmark rate at 2.75 percent is the lowest among Asian countries except Japan, and is about half the U.S. Federal Reserve's 5.25 percent. Inflation on the island held below 1 percent for the seventh month in January, boosting speculation the central bank will refrain from rate increases.

``Taiwan's interest rate is low among Asian countries and like other low interest rate countries, Taiwan has also seen money going out for overseas higher-yielding assets, putting downward pressure on the local currency,'' said Hideki Hayashi, a foreign-exchange strategist in Tokyo at Shinko Securities Co. ``The trend is for the Taiwan dollar to weaken.''

for info:

http://www.bloomberg.com/apps/news?pid=20601080&sid=aVGHYyr_gIfA&refer=asia

 

[Ichiro]

10feb-Asian Shares Rise to Record This Week as Profits Beat Estimates

By Ian C. Sayson

Feb. 10 (Bloomberg) -- Asian stocks climbed for the fourth week, with a regional benchmark rising to a record, as companies including Toyota Motor Corp. and Esprit Holdings Ltd. reported earnings that beat analysts' estimates.

``Earnings have turned out solid overall and there's still room for further increases for this year,'' said Hideo Arimura, who helps look after $16 billion at Dai-Ichi Kangyo Asset Management Co. in Tokyo.

NTT DoCoMo Inc. climbed to its highest since May 2004 after Merrill Lynch & Co. Inc. raised its stock rating to ``buy'' from ``neutral,'' citing stable earnings and possible higher dividend payments. PetroChina Co. and BHP Billiton led energy stocks higher after crude-oil prices traded above $60 a barrel for first time in five weeks.

The Morgan Stanley Capital International Asia-Pacific Index added 0.5 percent this week to a record 143.42, after rising 2.9 percent in the previous three weeks. Indexes of phone and energy stocks had the biggest jumps this week, while a measure of technology stocks was the only group to decline.

Japan's Nikkei 225 Stock Average fell 0.2 percent for the week, snapping three weeks of gains, while the broader Topix Index climbed for the fourth week.

China's Shanghai and Shenzhen 300 Index posted the region's steepest advance following reports the securities regulator lifted a ban on new fund sales. The Jakarta Composite Index was the biggest decliner due to concern flooding in the nation's capital may fuel inflation and hurt earnings.

for info:

http://www.bloomberg.com/apps/news?pid=20601089&sid=a0_K5jHQU7hk&refer=china

 

[Ichiro]

10feb-U.S. Hurts Asia With Addiction to Dollar Status: William Pesek

By William Pesek

Feb. 9 (Bloomberg) -- The financial-blog community is abuzz over a recent Financial Times item urging Japan to reduce its vast currency reserves.

The risk that Asian nations might direct central banks to reduce dollar reserves has tantalized markets in recent years. Mass dollar-selling would drive up U.S. interest rates and Asian currencies, testing a global economy riddled with imbalances.

While such questions have hovered over markets for years, the FT editorial on Feb. 7 hit a nerve with investors. The reason: It would indeed make sense for Japan to act now to reduce its foreign-exchange reserves.

In the 15 months through March 2004, Japan spent the equivalent of Indonesia's gross domestic product to keep the yen from rising against the dollar. The effort has much to do with why the Bank of Japan has $875 billion of currency reserves and why the weak yen is unnerving Europeans.

``Those reserves,'' the FT argued, ``are dead money that the BOJ could better employ elsewhere: other central banks, like that of China, would love such an opportunity. But most of all, selling down reserves would demonstrate to the world that Japan's currency interventions work both ways, and that it is interested in the stability of the yen rather than in keeping it permanently undervalued.''

So, is the BOJ about to shock markets? ``Interesting idea,'' Brad Setser, director of research at Roubini Global Economics LLC in New York, wrote in his blog. ``Not going to happen, though.''

Dollars and Oil

One reason is that Japan doesn't want to see the yen strengthen. Japanese companies are turning in record profits, thanks to a soft currency. Another explanation is worth exploring: that the U.S. is addicted to the dollar's reserve- currency status as much as developing economies are on petrodollars.

The reference here is to the so-called paradox of plenty. From Nigeria to Indonesia to the Middle East, history is awash with examples of inhabitants of resource-rich nations not prospering from underground treasures such as oil, gold or diamonds. As politicians and cronies get wealthy, there's often no incentive to create other industries to employ the masses.

One wonders if the dollar's linchpin role in global trade is breeding similar complacency in Washington.

By buying so many U.S. Treasuries, Asian central banks make it possible for the U.S. to finance massive current-account and budget deficits without devaluing the dollar and raising interest rates. That, in turn, allows the Bush administration to maintain its tax cuts even as it finances wars in Iraq, Afghanistan and who knows where after that. Iran? North Korea?

info:

http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_pesek&sid=aYZHFIjhF5uw

 

[Ichiro]

10feb-Paulson Can Give Me a Pay Raise and Save World: William Pesek

By William Pesek

Feb. 7 (Bloomberg) -- Those of us paid in Japan's chronically weak currency should rest easy: Henry Paulson is on the case.

The U.S. Treasury secretary on Jan. 31 said he's watching the value of the yen ``very, very carefully.'' Well, that's a huge load off my mind, especially as Paulson heads to Essen, Germany, for a Feb. 9-10 meeting of the Group of Seven ministers.

There, perhaps, Paulson's counterparts from Canada, France, Germany, Italy, the U.K. and even Japan will look very, very carefully over his shoulder as he watches the yen sit there -- weakly -- on his broker screen.

Watch is probably all they will do. For one thing, the G-7's power isn't what it used to be. Without the inclusion of China, India and other developing powers, the world's industrialized elite has little influence over global trends these days. Markets are far more unruly and unpredictable than they were a decade ago, when the G-7 could still have its way with investors.

info:

http://www.bloomberg.com/apps/news?pid=20601039&sid=a8OlM6NcCA0Q&refer=columnist_pesek

 

[Ichiro]

10feb-Biofuels Will Make China, India More Thirsty: Andy Mukherjee (water, water, water....Can we live without water??)

By Andy Mukherjee

Feb. 8 (Bloomberg) -- If water were a globally traded commodity, with unmet demand in China and India reflected in its price, the world might shed its newfound craze for biofuels.

It is bad enough that some of us need ethanol distilled in Scotland to lubricate our evenings.

Growing corn to make ethanol to run sport-utility vehicles is downright silly; nowhere more so than in China and India.

As many as 400 Chinese cities are facing water shortages; farmers in the most-populous nation are forgoing millions of tons of grain production every year. Per-capita availability of water is expected to shrink to alarming levels by 2030.

How serious is the shortage?

``The only thing that worries me about the China story is the water problem,'' commodities investor Jim Rogers, chairman of Beeland Interests Inc. in New York and a fan of China, said this week at a press conference in Melbourne.

``If China cannot solve the water problem, that could be the end of the story,'' said Rogers, who co-founded Quantum Fund with George Soros and then went biking around the world.

Amid this water scarcity, China has gone on to become the world's third-largest bio-ethanol producer after Brazil and the U.S., pouring thousands of gallons of water to grow a ton of corn, and then using more water to turn the corn into ethanol.

What a colossal waste.

As recently as December, the Chinese government came up with controls on corn-to-ethanol projects so as not to lose more precious water to producing fuel at the expense of food.

Misusing Water

The tradeoff between water and biofuels may also be crucial for India. One-sixth of India's food output is being supported by pumping groundwater, which is depleting rapidly.

In the state of Tamil Nadu, more than a third of aquifers are ``overexploited,'' meaning the rate at which water is being extracted is more than the pace of recharge.

According to the World Bank's estimates, by 2050 demand for water in India will exceed all available supplies.

India passed a law in May last year requiring gasoline to be mixed with 5 percent ethanol. The saving grace, from the point of view of water conservation, is that India doesn't yet allow sugarcane juice to be converted directly into ethanol. The fuel can only be produced from molasses, as a byproduct of sugar.

``The downside of growing food for fuel is water,'' Fred Pearce, an environmentalist and the author of the 2006 book ``When the Rivers Run Dry,'' said at a sugar-industry conference in Geneva in October.

info:http://www.bloomberg.com/apps/news?pid=20601039&sid=aFruG4mf4HAI&refer=columnist_mukherjee

 

[Ichiro]

9feb-Bernanke Correct to Target Inflation

by Jeremy Siegel, Ph.D.

osted on Thursday, February 1, 2007, 3:00AM

Ben Bernanke, Chairman of the Federal Reserve, will go before Congress next week to testify and respond to lawmakers’ questions on the state of monetary policy. Since his appointment early last year, Bernanke has gone through two such appearances and has passed both with flying colors. But this year promises to be different. Barney Frank, the new Democratic Chairman of the House Financial Services Committee, has indicated that he intends to challenge Bernanke’s goal of elevating “price stability” to the forefront of the central bank’s priorities, claiming that the Fed Chairman is effectively demoting the mandated goal of “full employment.”

But this is not the case. Bernanke is doing the right thing by highlighting the importance of inflation targeting. If Barney Frank really wants to keep the economy healthy and the jobless rate low, there are good reasons why he must back away from this confrontation.

The Mandated Goals of the Fed

The current Congressional mandate to the Federal Reserve goes back nearly three decades. In response to soaring inflation of the 1970s, the U.S. Congress passed the Full Employment and Balanced Growth Act in 1978, which required the Fed to pursue policies that promote “full employment, low long-term interest rates, and reasonable price stability.” Since low long-term interest rates would not be possible without low inflation, this Act was interpreted as requiring the Fed to pursue the dual mandate of full employment and low inflation.

Because of a growing body of theoretical and empirical studies, economists concluded that monetary stimulus can influence employment only temporarily, but has a far more permanent impact on inflation. Targeting a high level of employment may instead bring about a higher and accelerating rate of inflation.

Inflationary Expectations

The works of Nobel Laureates Milton Friedman and Edmund Phelps showed that inflation, once started, soon generates “inflationary expectations.” These expectations accelerate the inflationary process. This is because inflationary expectations become incorporated into the price setting behavior of firms, labor and rental contracts, and interest rates. Inflationary expectations can also depress the dollar on the international markets, raising the cost of all imported goods, including oil.

Once inflationary expectations take root, inflation becomes far more difficult to eradicate. To do so, the central bank must raise interest rates sharply, as they did in the early 1980s, which in turn precipitated a recession. The end result is an unemployment rate higher than it would have been if inflation were stamped out early.

for info:

http://finance.yahoo.com/expert/article/futureinvest/23457

 

[Ichiro]

10feb-P
G-7 Presses China on Yuan Flexibility
Saturday February 10, 4:14 pm ET
By Matt Moore, AP Business Writer
G-7 Recommends Foreign Currency Fluctuations, Vigilance on Hedge Funds

ESSEN, Germany (AP) -- China came under renewed pressure Saturday from the Group of Seven to make its yuan more flexible, while Japan emerged from the meeting without a public scolding, despite criticism beforehand that its weakened yen was hurting other economies.

The finance ministers and central bankers from the world's wealthiest nations also called for more vigilance on the rising power of hedge funds, but favored a conciliatory approach toward the industry. They also said major developed economies were showing solid growth, and that added that energy efficiency and diversification -- particularly renewable forms -- remained a priority.

China's tight control of its currency and huge trade surpluses have raised concerns in the West. The G-7 lauded China's commitment to "rebalance growth," but called on the country to let the yuan have greater flexibility in responding to market movements.

"Over the last two days, we discussed ways to keep the global economy growing in a balanced way, including stimulating domestic demand in Japan and Europe and pressing for greater exchange-rate flexibility in China," U.S. Treasury Secretary Henry Paulson said.

When the G-7 formed, comprising Britain, Canada, France, Germany, Italy, Japan, and the United States, China was an insular, closed communist state. In the three decades since, China's growth has exploded as it embraces elements of capitalism.

China has amassed more than $1 trillion in foreign currency reserves as it buys dollars to control the value of the yuan -- a practice G-7 finance ministers have criticized in the past.

Ahead of the meeting, Japan had faced complaints from the euro zone that its weakening yen was giving the country an unfair competitive edge, making Japanese goods cheaper than those in the EU.

But Japan was left out the G-7's declaration on foreign currency issues, while China was mentioned by name.

for info:

http://biz.yahoo.com/ap/070210/germany_g_7.html?.v=11

 

[Ichiro]

11feb-G-7 Urges Markets to Note Japan `On Track,' Omits Yen (Update2)

By Simon Kennedy and Rainer Buergin

Feb. 10 (Bloomberg) -- Finance ministers and central bankers from the Group of Seven nations urged investors to recognize that Japan's economic recovery is ``on track,'' stopping short of labelling the yen's decline as a threat to global growth.

At a meeting in Essen, Germany, the officials bridged a divide between Europeans who want the yen to strengthen, and the U.S. and Japanese who say investors should be free to set currency values without government interference.

With the yen trading near the record low reached against the euro last month, European officials signaled they'll keep sounding the alarm to speculators that the currency is out of kilter with Japan's expansion.

``It's a compromise,'' said Julian Callow, chief European economist at Barclays Capital in London and a former economist at the Bank of England. ``There are different interests at work.''

European Central Bank President Jean-Claude Trichet said the G-7 wanted to warn financial markets against making ``one-way bets,'' a reference to so-called carry trades, in which investors take advantage of Japan's low interest rates to borrow in yen and purchase higher-yielding assets in other markets.

Low Japanese Rates

Such trades have helped weaken the yen, given the Bank of Japan's benchmark rate of 0.25 percent lags behind the U.S. Federal Reserve's 5.25 percent and the ECB's 3.5 percent. Barclays estimates carry trades are at their most extreme since 1998, when Russia's economic crisis prompted traders to unwind their bets so rapidly that the yen soared 20 percent. Hedge-fund Long-Term Capital Management LP collapsed in the market turmoil.

These trades are ``not appropriate'' in current circumstances, Trichet told reporters in Essen.

In a review of the world economy, the G-7 said its performance remains ``favorable'' with U.S. growth becoming more sustainable, the European economy experiencing an ``increasingly broad-based upswing'' and Japan's recovery expected to continue.

``We are confident that the implications of these developments will be recognized by market participants and will be incorporated in their assessments of risks,'' the statement said.

Further Yen Decline?

info:http://www.bloomberg.com/apps/news?pid=20601087&sid=al29wy72djiw&refer=home

 

[Ichiro]

11feb-Yen May Fall; G-7 Stops Short of Saying Weak Currency Is Threat

By Aaron Pan and Min Zeng

Feb. 11 (Bloomberg) -- The yen may decline after the Group of Seven industrial nations stopped short of saying that the currency's weakness is a threat to the global economy.

The Japanese currency is trading near a record low against the euro and the weakest in four years versus the dollar as the Bank of Japan holds interest rates at 0.25 percent, the least among major economies. At a meeting in Essen, Germany, G-7 officials sought to reconcile Europeans who want the yen to strengthen with the U.S. and Japan, which say the market should set exchange rates.

``They came up with a compromise,'' said Alex Patelis, head of currency strategy in London at Merrill Lynch & Co. ``They didn't mention the yen but did warn that the market shouldn't make one-way bets. That won't go very far with the market.''

The yen fell to 121.71 per dollar on Feb. 9 in New York, from 121.13 on Feb. 2. Japan's currency declined to 158.31 per euro from 157.01. The dollar traded at $1.3008 per euro from $1.2961. The Japanese currency lost 0.5 percent last week against the dollar as the yen declined versus 15 of 16 most- traded currencies tracked by Bloomberg.

Finance ministers and central bankers from the G-7, in a communiqué released at the close of their meeting on Feb. 10, urged investors to recognize that Japan's economic recovery is ``on track.'' The statement didn't refer to weakness in the yen.

European Central Bank President Jean-Claude Trichet told reporters after the meeting that the G-7 still wanted to warn against making ``one-way bets'' in the foreign-exchange market.

info:http://www.bloomberg.com/apps/news?pid=20601087&sid=az01lzwdfIbc&refer=home

 

[Ichiro]

11feb-G-7 Stresses `Need to Be Vigilant' Over Hedge Funds (Update3)

By Rainer Buergin and Kevin Carmichael

Feb. 10 (Bloomberg) -- Finance ministers and central bank governors from the Group of Seven leading industrial countries narrowed differences over risks posed by hedge funds, agreeing on further consultations that may affect the lightly regulated pools of capital.

The ministers, led by Peer Steinbrueck, the host of a G-7 meeting in the western German city of Essen, agreed that the assessment of potential risks from hedge-fund operations has become ``more complex and challenging.''

``Given the strong growth of the hedge-fund industry and the instruments they trade, we need to be vigilant,'' the ministers and central bank governors said in their communique. ``We therefore agreed to further pursue the issue.''

German Finance Minister Steinbrueck put hedge funds on the G-7 agenda on concern the expansion of the $1.4 trillion industry threatens to roil global financial markets and disrupt growth. Scaling back earlier calls for tougher oversight, he won the support of his U.S. counterpart Henry Paulson, who has said the funds ``deserve to be scrutinized.''

``We're seeing a maturation in the way governments are viewing hedge-fund risk,'' said New York-based Roger Ehrenberg, former head of DB Advisers LLC, a subsidiary of Deutsche Bank AG that managed hedge funds.

``Hedge-fund managers recognize that they've one a poor job at public relations,'' Ehrenberg also said. ``They recognize that they have to cooperate given the size to which the industry has grown.''

info:http://www.bloomberg.com/apps/news?pid=20601103&sid=a.e0r4iHWPNk&refer=us

 

[Ichiro]

11feb-Yen May Fall; G-7 Stops Short of Saying Weak Currency Is Threat

By Aaron Pan and Min Zeng

Feb. 11 (Bloomberg) -- The yen may decline after the Group of Seven industrial nations stopped short of saying that the currency's weakness is a threat to the global economy.

The Japanese currency is trading near a record low against the euro and the weakest in four years versus the dollar as the Bank of Japan holds interest rates at 0.25 percent, the least among major economies. At a meeting in Essen, Germany, G-7 officials sought to reconcile Europeans who want the yen to strengthen with the U.S. and Japan, which say the market should set exchange rates.

``They came up with a compromise,'' said Alex Patelis, head of currency strategy in London at Merrill Lynch & Co. ``They didn't mention the yen but did warn that the market shouldn't make one-way bets. That won't go very far with the market.''

The yen fell to 121.71 per dollar on Feb. 9 in New York, from 121.13 on Feb. 2. Japan's currency declined to 158.31 per euro from 157.01. The dollar traded at $1.3008 per euro from $1.2961. The Japanese currency lost 0.5 percent last week against the dollar as the yen declined versus 15 of 16 most- traded currencies tracked by Bloomberg.

Finance ministers and central bankers from the G-7, in a communiqué released at the close of their meeting on Feb. 10, urged investors to recognize that Japan's economic recovery is ``on track.'' The statement didn't refer to weakness in the yen.

European Central Bank President Jean-Claude Trichet told reporters after the meeting that the G-7 still wanted to warn against making ``one-way bets'' in the foreign-exchange market.

The yen is the world's worst performing currency in the past month as investors borrow cheaply in Japan and exchange the funds to buy higher-yielding assets abroad, known as the carry trade.

European Concern

info:

http://www.bloomberg.com/apps/news?pid=20601087&sid=az01lzwdfIbc&refer=home