Exclusive: China central bank official says yuan at right level, disorderly capital flows unlikely

© Reuters. FILE PHOTO: Man sits in front of the headquarters of the People's Bank of China, the central bank, in Beijing © Reuters. FILE PHOTO: Man sits in front of the headquarters of the People’s Bank of China, the central bank, in Beijing

By Kevin Yao and Ryan Woo

BEIJING (Reuters) – China’s yuan is at an appropriate level currently and two-way fluctuations in the currency will not necessarily cause disorderly capital flows, a senior official at the People’s Bank of China told Reuters on Tuesday.

The yuan has weakened nearly 2.4% since U.S. President Donald Trump threatened early this month to impose more tariffs on Chinese goods from Sept. 1, though there are signs China is trying to stem the declines.

“The current level of exchange rate is appropriately aligned with fundamentals of China’s economy and market supply and demand,” Zhu Jun, head of the central bank’s international department, said in an interview with Reuters.

Zhu said China was “shocked” by the U.S. Treasury Department’s move last week to label China a currency manipulator, hours after Beijing let the yuan slide past the key 7-per dollar level to its lowest level since the global crisis.

But Zhu asserted that China will be able to “navigate all scenarios” arising from the Trump administration’s decision to label it a currency manipulator for the first time since 1994, which rattled global markets.

China is unlikely to face serious consequences from getting that label given the apparent lack of Group of Seven and International Monetary Fund support for Washington’s move, former and current U.S. and G7 officials said.

But some Chinese advisers and former officials have sounded alarm bells over a possible wider conflict between China and the United States. The year-long trade war between the world’s two largest economies has already spread beyond tit-for-tat tariffs on goods to other areas such as technology and currency.

UPGRADING THE TRADE WAR?

The real aim of the U.S. currency manipulator label is to disrupt China’s financial markets and its economy, said Chen , former chairman of the China Development Bank – the country’s biggest policy bank.

“The U.S. step to list China as a currency manipulating country is an important action to upgrade the trade war into a financial war,” Chen, who remains an influential figure on economic issues, told a forum over the weekend.

Zhu of the central bank told Reuters that in the short run, external shocks will play a role by influencing the yuan’s movements.

“That said, as long as RMB moves in an orderly manner based on market supply and demand, such movements in either direction do not necessarily mean disorderly movement of capital flow,” she said. The yuan is also known as renminbi, or RMB.

Zhu reiterated that recent yuan volatility was a normal market reaction to escalating trade tensions, adding “If it’s preventing such responses that would constitute real manipulation.”

Analysts say a weaker yuan could help China’s ailing exporters to cope with higher U.S. tariffs amid an escalating trade war, but any sharp yuan drops could fuel capital outflows as the world’s second-largest economy faces increased headwinds.

REPEATED PLEDGES

Chinese leaders have repeatedly pledged that they would not resort to competitive currency devaluation to support exports, or use the currency as a tool to cope with trade disputes.

Zhu said the yuan will be supported by China’s solid economic fundamentals, a stable debt ratio, contained financial risks, adequate foreign exchange reserves, and favorable interest rate spreads between China and major advanced economies.

“Over the medium and long term, we have full confidence in RMB as a strong currency,” she said.

In the second quarter, China’s annual economic growth pace slowed to a near 30-year low of 6.2%. Many analysts had expected a steadying in the second half as earlier stimulus measures started to kick in, but Trump’s latest tariff threat is likely to further pressure exporters and their domestic supply chains.

China’s foreign exchange reserves – the world’s largest – fall by $ 15.54 billion in July to $ 3.104 trillion, central bank data showed, amid rising trade tensions.

China burned through $ 1 trillion of reserves supporting the yuan in the last economic downturn in 2015, during which it devalued the currency in a surprise move. Since then, Beijing has shored up restrictions on capital outflows.

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Highlights of the Australian GDP data (if you muttered ‘lowlights’, you’re right)

Huge fail for policy makers in Australia with dreadful economic growth data for the first quarter of 2019.

Data post is here:

Bit more here:

OK, check these out:

  • slowest rate in more than 5 years
  • economic growth per person dropped for the 3rd quarter in a row – the first time this has happened since 1982
  • growth rate has halved since June quarter just last year. 50% down in 6 months!
  • domestic demand grew by only 0.1%
  • consumer spending annual growth is at its slowest since the middle of 2013
  • private demand -0.2% q/q
  • public demand +1.1% q/q (huge government spending)

A couple of bright spots

  • terms of trade improving
  • exports up 

AUD did, and is doing, very little. Taking a peek above 0.7

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Video: Brexit, the Canadian debt myth and the pair to watch right now

HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.

ADVISORY WARNING: FOREXLIVE™ provides references and links to selected blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information. Clients and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the client or prospect’s individual analysis and decision making. None of the blogs or other sources of information is to be considered as constituting a track record. Past performance is no guarantee of future results and FOREXLIVE™ specifically advises clients and prospects to carefully review all claims and representations made by advisors, bloggers, money managers and system vendors before investing any funds or opening an account with any Forex dealer. Any news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FOREXLIVE™ expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. As with all such advisory services, past results are never a guarantee of future results.

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“ISIS bride” Hoda Muthana says she has the right to return to U.S.

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World – CBSNews.com

Microsoft: What went right under Satya Nadella?

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On Monday, it will be five years since Satya Nadella was announced as Microsoft’s chief executive.

Since taking charge he has turned the tech firm’s fortunes around, making it the most valuable company in the world for the first time since 2002.

Go on, admit it.

You thought Microsoft was so last century, didn’t you? In the late 80s and 90s, the company’s Windows operating system ruled the world.

Catching the wave

But where Bill Gates – chief executive from 1975 to 2000 – caught the wave of personal computing, so Steve Ballmer – 2000 to 2014 – failed to do likewise with mobiles.

Although the Surface tablet is a modest success, Microsoft’s smartphones have flopped despite the firm paying more than 5.4bn euros ($ 6.2bn; £4.7bn) for Nokia’s handset business. Apple’s iPhone, and then Google’s Android left Microsoft in the dust.

The company has undergone the same stages of evolution experienced by many successful tech names.

  1. The nimble start-up with a new idea
  2. The fast-growing one-to-watch that’s changing the world, slaying the old guard in its path
  3. The omniprescence we can’t live without
  4. The uncomfortably big monopoly that buys out or subdues its smaller rivals
  5. The Evil Empire that has too much power, and knows too much
  6. The unwieldy supertanker that can’t change course fast enough to catch the next big wave

“Some of those waves we’ve missed, but we’re nothing if not persistent,” Steve Clayton tells me.

He’s Microsoft’s chief storyteller – and before I get too sniffy about his job title, I have to remember that’s technically my job too on Click.

Part of the reason Mr Nadella was picked for the top job was his determination not to miss the next big wave – cloud computing.

The Seventh Stage

“[Cloud is] the ability for us to have software anywhere on any device,” says Mr Clayton.

Forget the company’s ill-founded attempt to have its own brand of smartphones – the more devices on which it can run its now subscription-based Office suite, the more money it makes.

And subscriptions make up nearly two-thirds of its revenue these days.

Couple that with Azure, its cloud computing platform and data centres, and you can start to understand why Microsoft’s share price has tripled since Nadella took over.

In November 2018, it became the most valuable company on the planet for the first time since 2002, and has tussled with Amazon for the lead ever since.

During my day at Microsoft’s Redmond HQ near Seattle, I’m reminded that the unwieldy supertanker of stage six doesn’t have to vanish beneath that next wave.

Stage seven can either be a sinking of Titanic proportions or it can be a sinking into the background, becoming part of the infrastructure, and quietly, unostentatiously, allowing your confidence to grow.

“We don’t want to be the cool company in the tech sector,” Mr Nadella has previously said.

“We want to be the company that makes other people cool.”

Sure the PR machine is in full swing here. But the numbers suggest Microsoft has a lot to crow about.

And with that stage-seven confidence, comes an acceptance that you can’t win every battle; that you should welcome other’s successes.

Embracing new ideas that don’t have to originate within Microsoft, seems to be one of Mr Nadella’s core principles.

And so the firm has embraced open source, and partnered with competitors, including its cloud services rival, Amazon.

Microsoft Office now runs on the iPad – and Mr Clayton uses an iPhone.

“Don’t be a know-it-all, be a learn-it-all.”

That’s another Nadella quote for the bank.

“In 2014, we cancelled our company meeting where our leaders would tell employees what was important, in favour of having a hackathon that lets our employees tell our leaders what’s important,” recalls Jeff Ramos.

He is head of the Microsoft Garage, where employees with a bright idea can come and experiment, build, hack, and see if it has legs.

Inside the HypeZone

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“Our idea was very simple,” Lenin Sivalingam explodes with enthusiasm.

“We’re going to run computer vision [algorithms] on live streams, understand them pixel by pixel, and we’re going to find interesting moments, and show them to people.”

Mr Sivalingam is describing the HypeZone – the project that won his team Microsoft’s 2017 hackathon.

Having previously used artificial intelligence to analyse video streams from traffic cameras, Mr Sivalingam hit on the idea of analysing video game streams to find the most exciting moments.

Fortnite, he explains, is somewhat boring to watch for the first 20 minutes. The Battle Royale fight-to-the-death game only gets really exciting when it’s down to the last few players.

In the style of the NFL RedZone, the HypeZone, running on Microsoft’s streaming site Mixer, uses AI techniques to examine every stream coming into the site.

A character’s health, kill count, and other factors, help determine how exciting the battle is, and the most thrilling one happening at that moment is the one it shows.

Once the game is over, it switches to another stream that’s approaching its climax.

It’s also great for streamers, says Mr Sivalingam, as it can bring really good players to prominence, simply by the quality of their gameplay, rather than their current celebrity status.

The Batcave

Of course there’s a place called the Batcave. It’s a really plain-looking room, in which extraordinary things are happening.

I and four others are wearing the firm’s HoloLens augmented reality headsets – we can see each other and our surroundings, but floating around us are pictures, 3D objects, text and presentation material.

To add new objects to the space, we say search terms out loud. The results appear as a stack of images for us to manipulate.

Oh, and did I mention that two of my collaborators aren’t even in the same city as me?

One is in New York, and one is in San Francisco. I can see them, and they can see us, as animated avatars, which blink, and lip-sync to the words we speak.

Microsoft changed the way we worked once with Windows.

There’s a long way to go yet, but maybe, when augmented reality is ready for prime time, this could be the workspace of the future.

Surfer Cool

“The CEO sets the tone, the direction, the strategy and the culture,” says Mr Clayton.

Microsoft’s former boss Mr Ballmer once said Linux open-source software was a cancer.

Mr Nadella has stood in front of a display saying Microsoft loves Linux, made Microsoft a member of the Linux Foundation and spent $ 7.5bn buying Github – the code-sharing site where much of the content is designed to run on Linux-based operating systems.

Under his watch, this has become a company that embraces others’ ideas.

All, admittedly, with the confidence that comes from having caught another wave – Cloud – which pays its bills.

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BBC News – Technology

Three ways to start off the forex year right

Want to have a better year in 2019?

Fortunes aren’t built in a day and there are 364 more days to go in 2019. It’s a good time to break bad habits and build good ones so here are three friendly reminders.

1. Leave 2018 in the past

Should old acquaintance be forgot, and never brought to mind?’ – Old Lang Syne. Had a good year in 2018? Great, forget about it and focus on 2019. Had a bad year in 2018? Sorry to hear about it but everyone gets a fresh start at new year.

2. Get organized

Close the books, tidy up the loose ends. This year, track and document your trades better than ever. Adding a layer of paperwork can make you a more disciplined trader.

3. You’re living in the stone ages, man

If you’re not on top of the latest technology, you’re behind. That doesn’t mean you have to use technology to change your trading style because that could be counterproductive but knowing what’s new and what’s possible is a never-ending part of staying on top. At the very least, change your passwords and update your software. I also always use the first day of the year to tidy up my email and get ride of all the spam in my inbox.

On great bit of technology you can embrace is our Telegram channel. We have more than 6000 people discussing the latest FX moves every day. Join the ForexLive Telegram channel here: https://t.me/joinchat/HveypkdU1-wmyDHb8gddSA

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