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{\info{\author Dave Rawson & Eileen White}{\creatim\yr2010\mo1\dy18\hr11\min32}
{\revtim\yr0\mo0\dy0\hr0\min0}{\printim\yr0\mo0\dy0\hr0\min0}{\comment StarWriter}
{\vern3100}}\deftab709
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{\pgdsc0\pgdscuse195\pgwsxn12240\pghsxn15840\marglsxn1134\margrsxn1134\margtsxn113
4\margbsxn1134\pgdscnxt0 Standard;}}
\
paperh15840\paperw12240\margl1134\margr1134\margt1134\margb1134\sectd\sbknone\pgws
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\pard\plain
\ltrpar\s7\cf0{\*\hyphen2\hyphlead2\hyphtrail2\hyphmax0}\sa240\keepn\rtlch\afs24\l
ang255\ab\ltrch\dbch\af6\langfe255\hich\f0\fs24\lang1033\b\loch\f0\fs24\lang1033\b
{\rtlch \ltrch\loch\f0\fs24\lang1033\i0\b\ltrch\hich\f5\loch\f5 {\*\bkmkstart
DDE_LINK1}Dollar To Rise, Yen To Fall: China Official{\*\bkmkend DDE_LINK1}}
\par \pard\plain
\ltrpar\s3\cf0{\*\hyphen2\hyphlead2\hyphtrail2\hyphmax0}\sa240\rtlch\af8\afs24\lan
g255\ltrch\dbch\af6\langfe255\hich\f0\fs24\lang1033\loch\f0\fs24\lang1033
{\rtlch \ltrch\loch\f0\fs24\lang1033\i0\b0 BEIJING: An investment strategist at
China's $300 billion wealth fund said the world's third-largest economy now had
say in the exchange rate of {\cf1\ltrch\hich\f3\loch\f3 the US dollar, which it
expects to rise while the yen should fall further.}}
\par \pard\plain
\ltrpar\s3\cf1{\*\hyphen2\hyphlead2\hyphtrail2\hyphmax0}\sa240\rtlch\af8\afs24\lan
g255\ltrch\dbch\af6\langfe255\hich\f3\fs24\lang1033\loch\f3\fs24\lang1033
{\rtlch \ltrch\loch\f3\fs24\lang1033\i0\b0 The comments by Peng Junming, who works
in the asset allocation and strategic research department at China Investment
Corp, triggered a rally in the dollar. "I think the dollar is at its bottom now.
There will be very limited space for the dollar to drop f
urther," he told an academic forum.}
\par \pard\plain
\ltrpar\s3\cf0{\*\hyphen2\hyphlead2\hyphtrail2\hyphmax0}\sa120\rtlch\af8\afs24\lan
g255\ltrch\dbch\af6\langfe255\hich\f0\fs24\lang1033\loch\f0\fs24\lang1033
{\rtlch \ltrch\loch\f3\fs24\lang1033\i0\b0 "The yen is what, I think, has the
worst outlook. The yen will continue to drop, unlike the dollar, which will not
serve for long as a source of funding carry trades."}
\par \pard\plain
\ltrpar\s3\cf0{\*\hyphen2\hyphlead2\hyphtrail2\hyphmax0}\sa120\rtlch\af8\afs24\lan
g255\ltrch\dbch\af6\langfe255\hich\f0\fs24\lang1033\loch\f0\fs24\lang1033
{\rtlch \ltrch\loch\f3\fs24\lang1033\i0\b0 The dollar rose more than half a yen
close to 92.40 yen on the news, then pared gains after Peng said his speech at the
Chinese Academy of Social Sciences reflected personal views. The euro slid against
the dollar and gold dropped before rebounding slightl
y. The market reaction to Peng's comments shows the sensitivity to clues on how
China and its state fund view the markets.}
\par \pard\plain
\ltrpar\s3\cf0{\*\hyphen2\hyphlead2\hyphtrail2\hyphmax0}\sa120\rtlch\af8\afs24\lan
g255\ltrch\dbch\af6\langfe255\hich\f0\fs24\lang1033\loch\f0\fs24\lang1033
{\rtlch \ltrch\loch\f3\fs24\lang1033\i0\b0 "A US government official recently said
that the dollar is ours but the problem is China's. But China now has a voice in
influencing the dollar's exchange rate and the interest rate on US government
debt," Peng said. "Although the dollar belongs to the US.
China has a role to play in determining the dollar's exchange rate."}
\par \pard\plain
\ltrpar\s3\cf0{\*\hyphen2\hyphlead2\hyphtrail2\hyphmax0}\sa120\rtlch\af8\afs24\lan
g255\ltrch\dbch\af6\langfe255\hich\f0\fs24\lang1033\loch\f0\fs24\lang1033
{\rtlch \ltrch\loch\f3\fs24\lang1033\i0\b0 NO NEED FOR GOLD}
\par \pard\plain
\ltrpar\s3\cf0{\*\hyphen2\hyphlead2\hyphtrail2\hyphmax0}\sa120\rtlch\af8\afs24\lan
g255\ltrch\dbch\af6\langfe255\hich\f0\fs24\lang1033\loch\f0\fs24\lang1033
{\rtlch \ltrch\loch\f3\fs24\lang1033\i0\b0 Peng noted that China's stash of
dollars enabled it to influence commodities markets. Commodities like oil are
priced in dollars and the prices tend to move inversely to the dollar. "We can
weigh down or push up the dollar exchange rate, which will have an
impact on the global commodity futures market."}
\par \pard\plain
\ltrpar\s3\cf0{\*\hyphen2\hyphlead2\hyphtrail2\hyphmax0}\sa120\rtlch\af8\afs24\lan
g255\ltrch\dbch\af6\langfe255\hich\f0\fs24\lang1033\loch\f0\fs24\lang1033
{\rtlch \ltrch\loch\f3\fs24\lang1033\i0\b0 Peng was explicit in his view on gold:
"China should have the right attitude about investing in gold. There is no urgent
need for China to increase gold buying for now, because prices are high." He
defended US Treasury investments, arguing they had offset
losses in stocks and helped swell currency reserves in 2007 and 2008.}
\par \pard\plain
\ltrpar\s3\cf0{\*\hyphen2\hyphlead2\hyphtrail2\hyphmax0}\sa120\rtlch\af8\afs24\lan
g255\ltrch\dbch\af6\langfe255\hich\f0\fs24\lang1033\loch\f0\fs24\lang1033
{\rtlch \ltrch\loch\f3\fs24\lang1033\i0\b0 About two-thirds of China's reserves,
the largest stockpile in the world at $2.27 trillion, are estimated to be invested
in dollar assets. Lou Jiwei, CIC's chairman, has been careful not to say much
about how the fund invests its money. In October 2009, he
said the fund was putting more money into commodities, real estate and
infrastructure to hedge against medium- and long-term inflation and a fall in big
currencies.}
\par \pard\plain
\ltrpar\s3\cf0{\*\hyphen2\hyphlead2\hyphtrail2\hyphmax0}\sa120\rtlch\af8\afs24\lan
g255\ltrch\dbch\af6\langfe255\hich\f0\fs24\lang1033\loch\f0\fs24\lang1033
{\rtlch \ltrch\loch\f3\fs24\lang1033\i0\b0 Mansoor Mohi-uddin, currency strategist
at UBS in Singapore, said sovereign wealth funds are returning to prominence after
losing influence during the financial crisis. However, private sector US portfolio
managers have the ultimate say on the dollar, he n
oted.}
\par \pard\plain
\ltrpar\s3\cf0{\*\hyphen2\hyphlead2\hyphtrail2\hyphmax0}\sa120\rtlch\af8\afs24\lan
g255\ltrch\dbch\af6\langfe255\hich\f0\fs24\lang1033\loch\f0\fs24\lang1033
{\rtlch \ltrch\loch\f3\fs24\lang1033\i0\b0 "The portfolios of both sovereign
wealth funds and central banks globally remain dwarfed by US asset managers. It is
the latter, as the largest holders of dollars in the world, who will continue to
determine the ultimate direction of the greenback," he sai
d note to clients. Turning to interest rates, Peng, who previously worked in the
New York office of the Chinese central bank, said he expected that both the United
States and China would raise rates in the second half of the year.}
\par \pard\plain
\ltrpar\s3\cf0{\*\hyphen2\hyphlead2\hyphtrail2\hyphmax0}\sa120\rtlch\af8\afs24\lan
g255\ltrch\dbch\af6\langfe255\hich\f0\fs24\lang1033\loch\f0\fs24\lang1033
{\rtlch \ltrch\loch\f3\fs24\lang1033\i0\b0 Many in the market have assumed that
China will wait for the United States to raise rates before doing so out of fear
that a bigger rate differential will attract speculative capital, adding more
money to the Chinese economy already awash with cash. But Pe
ng said that the People's Bank of China may have to move first to raise rates in
order to combat asset bubbles at home.}
\par \pard\plain
\ltrpar\s3\cf0{\*\hyphen2\hyphlead2\hyphtrail2\hyphmax0}\sa120\rtlch\af8\afs24\lan
g255\ltrch\dbch\af6\langfe255\hich\f0\fs24\lang1033\loch\f0\fs24\lang1033
{\rtlch \ltrch\loch\f3\fs24\lang1033\i0\b0 Officials have repeatedly warned that
property prices are rising too rapidly, but so far have relied largely on land and
tax policies to calm the market. China Investment Corp was set up in late 2007
with $200 billion hived off from the foreign exchange st
ockpile, with a mandate of seeking higher returns than the more cautious reserve
management agency.}
\par \pard\plain
\ltrpar\s3\cf0{\*\hyphen2\hyphlead2\hyphtrail2\hyphmax0}\sa240\rtlch\af8\afs24\lan
g255\ltrch\dbch\af6\langfe255\hich\f0\fs24\lang1033\loch\f0\fs24\lang1033{\rtlch \
ltrch\loch\f0\fs24\lang1033\i0\b0\cf1\ltrch\hich\f3\loch\f3 Thanks largely to
investments in domestic banks, its assets under management reached $300 billion at
the end of 2008. Chinese media have reported that CIC might be in line to receive
as much as $200 billion extra from the foreign currency pot. Peng said he
had heard that the government will probably give CIC more money to manage, but
that the size of the capital injection was unclear.}
\par }