CHINA HOLDING FIRM AMID CRITICISM OF HIGH VALUE OF ITS CURRENCY - 130 US congressmen have asked US President Barak Obama to label China 'a currency manipulator'. The International Monetary Fund said yesterday that it believes the Chinese currency, the renminbi or yuan, is 'very much undervalued'. IMF chief Dominique Strauss Khan said that the 'massive' buildup of reserves by some countries, like China, has put the international monetary system under strain. The IMF has rules against countries manipulating their currencies to gain an unfair trade advantage, but it has no powers to force China to to change anything, as it does not borrow from the fund.
Nick Hastings, from Dow Jones Newswires, says the yuan's undervaluation makes Chinese goods more competitive. He says the US might step back from going as far as labelling China a 'currency manipulator' as diplomatically it would not be a very good move. He says there are lots of reasons why the US believes that the China is being a little bit unfair in terms of keeping its currency pegged to the dollar at this stage of the game. He says the US is having trouble getting out of the recession, with the recovery creeping along at a much slower pace than would be liked and therefore, would really like to boost its exports. He points out that China has been able to do this by keeping its currency low.
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MORNING BRIEFS - The European Union has criticised its member countries for having 'optimistic' growth assumptions and bloated deficits. It says Ireland needs to bring spending and borrowing under control; take action on public sector pensions and give more details of cuts planned over the next few years as the current plans lack detail. Germany, France, Spain and Italy were also warned they were over-reliant on economic recovery to meet their debt targets. Brussels was commenting on plans by some of the biggest EU countries to bring down public spending.
*** Alexander Lebedev has moved closer to control of the London Independent and Independent on sunday newspapers yesterday after the deal was cleared by the UK's Office of Fair Trading, which said there was no competition barrier. The Russian billionaire already owns London's Evening Standard. Lebedev and Independent News and Media entered an exclusive non-binding agreement in December, but talks have dragged on.
*** Four major banks have been ordered to stand trial in Italy in a fraud case related to derivatives trading. JP Morgan Chase, UBS, Deutsche Bank and Germany's Depfa bank have been told they will be tried for aggravated fraud, along with 13 other people. The charges relate to the sale of derivatives to the city of Milan. JP Morgan denied employees involved had acted inappropriately, while Deutsche and UBS also denied any wrongdoing.
*** Recruiter Hays is looking for up to 800 Irish bankers to fill vacancies in several UK-based banks. It says most of the vacancies are for bankers with accountancy backgrounds, with salaries ranging between £50,000 and £80,000 pounds sterling.
*** Denis O'Brien's Digicel Group is to buy just over half of its sister company Digicel Pacific, after a $775m bond sale this week. The rest of the company could be bought later. 84% shareholder Denis O'Brien is set to make more than $500m from the sale.
*** On the currency markets this morning the euro is trading at $1.3680 cents and 89.45 pence sterling.
