WASHINGTON (CBS News) ― President Obama says
the U.S.-China relationship will mold the 21st century.
The president spoke Monday morning to the opening session of two days of critical talks with top Beijing leaders on issues ranging from the troubled world economy to climate change and nuclear proliferation.
Obama said that links between Beijing and Washington are "as important as any bilateral relationship in the world," declaring that the two countries must base their partnership on realism. Obama said: "That is the responsibility we bear."
Saying that Washington and Beijing are in a position to vastly affect life around the world in the 21st century, Obama declared: "I believe that we are poised to make steady progress on some of the most important issues of our times."
Obama said the two countries need to forge closer ties to address challenges ranging from lifting the global economy out of a deep recession to nuclear proliferation. And he also said he was under "no illusions that the United States and China will agree on every issue" but said closer cooperation in important areas was critical for the world.
Two days of high-level talks between the United States and China are expected to expose sharp differences on trade and soaring U.S. budget deficits, but the discussion could be more amicable in the area of foreign policy.
The Obama administration is going out of its way to praise Beijing for the help it has already provided on pressuring North Korea to abandon its nuclear program.
Secretary of State Hillary Rodham Clinton, who with Treasury Secretary Timothy Geithner will lead the U.S. delegation, praised China on Sunday for being "positive and productive" in dealing with North Korea.
"We've been extremely gratified by their forward-leaning commitment to sanctions and the private messages that they have conveyed to the North Koreans," Clinton said on NBC's "Meet the Press."
Clinton's remarks came ahead of discussions Monday and Tuesday in Washington that continue a dialogue started by the Bush administration in 2006 to bridge differences between the two economic superpowers.
Both sides are emphasizing the importance of the meetings. The Chinese are bringing 150 diplomats - one of the largest delegations it has ever assembled for discussions in Washington - and the administration will start the discussions with remarks Monday by President Obama.
With the global economy mired in recession, the United States and China have enormous stakes in resolving tensions in such areas as America's huge trade deficit with China and the Chinese government's unease over America's soaring budget deficits.
Other issues such as climate control will also be on the agenda. Both countries are the largest producers of the greenhouse gases blamed for global warming.
Three years ago, then-Treasury Secretary Henry Paulson used the initial U.S.-China talks to press Beijing to let its currency, the yuan, rise in value against the dollar to make it cheaper for Chinese to buy U.S. goods. U.S. manufacturers blame an undervalued yuan for record U.S. trade deficits with China - and, in part, for a decline in U.S. jobs.
The U.S. efforts have yielded mixed results. The yuan, after rising in value about 22 percent since 2005, has scarcely budged in the past year. Beijing had begun to fear that a stronger yuan could threaten its exports. Chinese exports already were under pressure from the global recession.
"Clinton and Geithner are in the unenviable position of trying to patch over differences between the U.S. and China at a time when China's currency, the yuan, is being used more in international trade," says CBS News foreign affairs analyst Pamela Falk.
Falk, who attended meetings with U.S. and international economists in Beijing last week, predicts the talks are likely to achieve some success on the issue of the yuan's appreciation, "which will decrease the chances of a conflict with the U.S. Congress over the trade deficit."
In another possible boon to the talks, Falk reports that China continues to buy U.S. Treasury obligations, according to the International Monetary Fund - good news after Beijing expressed severe concerns over their value due to the recession-battered American economy.
The Obama administration intends to remain focused on the trade gap, telling Beijing that it can't rely on U.S. consumers to pull the global economy out of recession this time. In part, that's because U.S. household savings rates are rising, shrinking consumer spending in this country.
For the United States, suffering from a 9.5 percent unemployment rate, the ultimate goal is to help put more Americans to work.
While the U.S. trade deficit with China has narrowed slightly this year, it is still the largest imbalance with any country. Critics in Congress say unless China does much more in the currency area, they will seek to pass legislation to impose economic sanctions on China, a move that could spark a trade war between the two nations.
Geithner and Clinton will be joined by their Chinese counterparts, Vice Premier Wang Qishan and State Councilor Dai Bingguo.
For their part, Chinese officials are making clear they want further explanations of what the administration plans to do about the soaring U.S. budget deficits. China, the largest foreign holder of U.S. Treasury debt - $801.5 billion - wants to know that those holdings are safe and won't be jeopardized in case of future inflation.
"The Chinese delegation, especially Vice Premier Wang, will make the request that the U.S. side should adopt responsible policies to ensure the basic stability of the exchange rate of the U.S. dollar and protect the safety of Chinese assets in the United States," Zhu Guangyao, an assistant Chinese finance minister, told reporters in Beijing last week.
The Chinese are likely to hear a repeat of the assurances Geithner gave them when he visited China last month. He said then that the administration is committed to cutting the U.S. budget deficit - expected to hit $1.84 trillion this year - in half once the emergency spending to ease the recession and the financial crisis are no longer needed.
Constructing and managing a stock portfolio is hard. Just ask any professional fund manager most of whom have had a tough time since early 2008. So, what should retail investors keep in mind when it comes to their stock portfolio?
First of all, retail investors must recognize that they are competing against the pros. Therefore, you should not do this if you do not have the time or resources to match the research and analytics done by the pros.
Secondly, you must have an investing philosophy that guides you irrespective of the prevailing market conditions.
Recognize whether you are a day trader, punting on every rumour that you come across, or if you are a value investor who buys and holds for at least a minimum of 4-5 years.
Are you trading on the fundamentals and operating performance of the companies, or are just following trends and the prevailing flavour of the month.
If you stick to your investment philosophy then you will be disciplined to look at investment opportunities in a consistent way.
Thirdly, understand your risk profile. Are you risk averse? Or are you willing to take on extra risk in order to earn higher returns? Most retail investors ignore that high returns cannot be earned without exposing oneself to higher risk, and then get upset when they end up losing their money.
Does your risk profile match the stocks that you own in your portfolio - do you know why certain stocks are in your portfolio? Is it because your neighbour gave you a tip, or because you are confident that these stocks will help you to fulfill your financial goals based on your criteria?
NEW DELHI (Reuters) - India's private airline operators on Sunday called off a strike planned for Aug 18, responding to a government offer to hold talks to see how the ailing industry could tide over its financial woes.
The Federation of Indian Airlines (FIA), which includes five of India's top private airlines, said in a statement that the strike was also being put "on hold" in view of the inconvenience it could cause of thousands of passengers.
India's aviation industry soared with growth of more than 25 percent in the past few years when the economy was booming, but is expected to lose $2.1 billion in 2009/10 because of high operating costs and a dip in demand after the economic slowdown.
Private airlines, seen as a symbol of India's economic modernisation, carried about 83 percent of India's 11 million air passengers in the June quarter.
"The... FIA hopes that constructive dialogue with the government will lead to redressal of the problems faced by the aviation industry," the statement said.
Private airlines say they need the government to reduce taxes on jet fuel to a uniform 4 percent from the current average rate of 26 percent across various Indian states.
Aviation fuel makes more than 40 percent of the operating costs an airline. They also want the government to cut a number of other levies, including airport development and landing and navigational charges.
The downturn has also hit national airline carrier Air India, which has asked the government for an expensive bailout.
Mumbai/Delhi: Central Bureau of Investigation (CBI) officials
on Sunday roped in the Enforcement Directorate (ED) in the bribery
case against
National Commission for Scheduled Castes (NCSC) chief Buta Singh's son Sarabjot Singh alias Sweety Baba.
on Sunday roped in the Enforcement Directorate (ED) in the bribery
case against
National Commission for Scheduled Castes (NCSC) chief Buta Singh's son Sarabjot Singh alias Sweety Baba.
The CBI arrested alleged hawala operators Anup Begi, Dhukh Singh Chauhan and Madan Singh, who were reportedly involved in collecting money from the complainant, contractor Ramrao Patil, and were going to send the money to another operator, Shyamlal Chaudhari, in Bangalore. CBI officials have launched a manhunt for Chaudhari.
CBI joint director Rishiraj Singh said that Dhukh Singh was working on orders from a suspected hawala operator based in Bangalore.
He added, "We will also seek help from the income tax department. Our teams are working across the country to nab the Bangalore-based operator."
Dhukh Singh was arrested in a case under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act (Cofeposa) and had served a jail term. CBI director Ashwani Kumar did not rule Buta's questioning in the case.
The CBI conducted searches at Sarabjot's house in Jangpura, south Delhi, and recovered three unlicensed firearms and some live
cartridges. The Delhi police have registered a case under the Arms Act against Sarabjot, who has been remanded in CBI custody till August 5.
Buta Singh, a former Union home minister, ruled out his resignation and said he is being victimised and framed by the CBI, which is using his son as a tool. He, however, said he will cooperate with the probe agency if "proper procedures" were followed.
Buta also said he had "briefed" prime minister Manmohan Singh on the issue. "I am seeking an appointment to explain my position," Buta, who has been expelled from the Congress, told reporters.
FOR ANYONE who needs to send money overseas on a regular basis, these are testing times. In the last 18 months, sterling has lost 17% of its value against the dollar and 13% against the euro. And although it has rallied to some extent over the past couple of months, currency experts are not expecting the pound to regain much more of this lost ground anytime soon.
This decline in value has been marked as the financial crisis has gripped the UK and the global economy. In short, sterling has been particularly hard-hit as the UK's economy is so dependent on the financial sector.
This will certainly not be news to Scotland's 100,000-strong immigrant population, who collectively transfer around £50 million a year to family members back home, according to foreign exchange comparison site Sendmoneyhome.org. Then there are the many thousands of people who own second homes overseas, whose mortgage payments will have become increasingly onerous.
Emmanuel Addy, a director at Sendmoneyhome.org, says that given the increased volatility in foreign exchange rates, anyone in these kinds of categories needs to make sure they have accurate and up-to-date information on exchange rates. And people should not underestimate the impact fluctuating exchange rates will have on the sums they send abroad. In a 16-month period between October 2007 and January 2009, sterling went from a 25-year high against the dollar of £1 = $2.11 to a 34-year low of £1 = $1.35.
Stephen Hughes, a director at Foreign Currency Direct, says: "The currency markets have been pretty hard-hit recently by the world economic downturn and recession and markets have become a lot more volatile than in times past. It is not uncommon to see daily currency movements of more than 2%, which on a transfer of, say, £50,000 could buy you at the high somewhere in the region of £1200 more than at the low."
For migrants paid in sterling and sending a considerable portion of their income back home to a country pegged to the dollar, such as Pakistan, then the rise in the strength of the dollar will have seriously dented the size of the sum being received by relatives back home.
A salary of £20,000 would have been worth $42,200 to those spending in dollars in October 2007, but just $27,000 by January 2009. This represents a loss of $15,200 in spending power back home over the period.
The situation is no more rosy for Scots with second homes in Malaga or Florida. For those with homes in Europe, for instance, in August 2008 £1 was worth 1.27. Fast forward to this week and that same £1 is now worth only 1.15 - a slump of 9%. To make things worse, house prices have collapsed around the world at the same time. In other words, they are paying more for a property worth considerably less than it was two years ago.
As well as keeping on top of fluctuations, Addy advises against using the UK high street banks for regular transfers, since they offer exchange rates that are less competitive, and apply transaction fees as high as £40.
If you are looking for a bank to transfer money to countries that have big immigrant populations in Scotland, such as Pakistan or Poland, he says it is worth checking on country-specific banks which have UK-based branches, as it is often free to transfer funds if you are an account holder.
What emerges is that the difference in exchange rates can be surprisingly wide. At the time of writing, someone sending £500 to Pakistan would have received an exchange rate of £1 = 131.18 Pakistani rupees with Habib Bank UK, but just 127.79 rupees for their £1 with Bank of Scotland. What is more, the latter would have charged a fee of £17.50 and taken between three and five working days to complete the transfer, whereas Habib Bank would have applied a fee of just £5 and transferred the money instantly.
For smaller transfers of a few hundred pounds, it also pays to check on some of the online providers, whose fees can be as little as 50p and can be quicker than banks. For large and regular transfers such as pensions or mortgages, foreign exchange specialists will be able to offer extremely competitive exchange rates without charging a fee or commission. According to Addy, using a specialist foreign exchange provider can boost the amount received overseas by as much as 30%.
Over the longer term, these payment charges can really mount up. Currency transfer specialist Foreign Currency Direct (FCD) calculates that on a 15-year French mortgage of £800 per month, the saving using its regular payment plan would be more than £12,500 when compared with a typical high-street bank (assuming the typical difference between bank and its exchange rate of 2% and current average transaction charges).
Deepak Goyal, an international payments specialist with foreign exchange group Currencies Direct, says that an increasing number of Scots are waking up to the financial benefits of using a specialist foreign exchange firm when transferring money overseas.
These two specialists assign each customer a specific broker, which gives them a set of eyes and ears in the market that they may not otherwise have. By keeping their broker aware of their own personal requirements, they are in a much stronger position to take advantage of those often short-lived spikes in currency prices, and are able to secure their currency during even the shortest window of opportunity.
Both also offer customers the option to fix at a specific exchange rate for an agreed sum to be transferred for up to 24 months. This is effectively a hedging arrangement for individuals of the kind typically only offered by banks to their large business customers.
Goyal explains: "Say at the start of the year a client with financial commitments overseas decides they want to lock into the current exchange rate. They will say, I earn X and I think the current exchange rate is a good one so I want to lock in.' That means that any transaction they make within the agreed sum for that year will be at that exchange rate no matter what happens to rates after that. So the client gets certainty about the amount of sterling dollars or euros they will have for that year."
Stephen Hughes of FCD says there has been a 41% increase in the number of clients taking out regular repayment plans in the last year, while Goyal says his company has also seen unprecedented growth in demand for its salary protection product.
He concludes: "The message from clients is that they are increasingly taking charge of their finances and playing a more active role.
"Whereas before they would have been paid in pounds and had payments to make overseas but just let the bank do it, increasingly now they are taking a more active part in transactions."
Those who are still out of pocket from the big currency swing, take note.
KARACHI: The foreign exchange market may see another massive dollar buying form Monday after the private sector was given responsibility to pay 50 per cent oil import bill from August 1.Experts and dealers see depreciation of the rupee amid massive dollar demand by the private sector, which has already indicated its presence.
The State Bank of Pakistan under the agreement with the International Monetary Fund (IMF) is gradually shifting the load of oil import bill payment to private sector.
Dealers said the import of diesel and furnace oil would bring a demand of about $5 billion from the private sector while the total forex reserves of banks stand at $3.4 billion.
‘There is no doubt that the market will see aggressive dollar buying during the current year and that will escalate the price of the US currency,’ said Atif Ahmed, a currency dealer.
Experts on exchange rate were sure that the rupee would lose against the US currency but were not able to assess the quantum.
‘The depreciation looks imminent but it depends on the inflows of dollars in the local market,’ said a brokerage house researcher.
‘If the oil prices remain constant at the current level and inflows improve then it will have low level effect on exchange rate,’ said the researcher.
However, analysts observed that the exchange rate scenario was not good for the US currency in the global market which means that dollar might lose weight against the international currencies that would have positive impact on the rupee.
Analysts said the recession in the US was still not over while the low oil prices had reduced the dollar demand in the global market which could reduce the dollar valuation in the coming months.
If the remittances remain on the higher side as they were in 2008-09 and inflows from IMF continue, the exchange rate may see stability despite higher dollar buying by the private sector, currency dealers said.
‘The dollar buying will surely involve speculative forces which would create some destabilisation but it could be checked with higher inflows,’ said Atif.
However, it was observed that the country’s reserves had been declining since the first week of July, which is alarming especially when the private sector has gotten a major role in the exchange rate mechanism.
The State Bank had taken charge of paying oil bills in July 2008 to protect the exchange rate from speculative forces which caused serious damage to the value of rupee.
By Kim Jae-kyoung
Staff Reporter
The nation's foreign exchange reserves are expected to reach up to $270 billion this year on the back of the large current account surplus and the won's appreciation against the U.S. dollar, according to analysts and policymakers.
The reserves reached a nine-month high of $231.7 billion in June, the biggest since last September when they stood at $239.7 billion. The reserves rose for the fourth straight month in June and were up $30 billion from $217.4 billion in January.
In its latest report, ING Group said that the Bank of Korea (BOK) will use the Korean won appreciation pressure to accelerate the restoration of foreign reserves.
``We remain of the view that the BOK will boost its foreign exchange reserves to at least their May 2008 peak of $264 billion and more likely to $300 billion before accommodating selling pressure and allowing the won-dollar exchange rate to trade below 1,200,'' it said.
The local currency closed at 1,228.5 won per dollar Friday, up 8.3 won from the previous close, and the strongest level since Oct. 14, 2008 and the highest closing this year.
The Ministry of Strategy and Finance also expects the reserves to climb to $270 billion by the end of the year.
``The reserves are likely to exceed the previous record, buoyed by trade surplus, the stabilization of the local currency and an influx of foreign capital searching for local stocks,'' a ministry official said.
According to the International Monetary Fund (IMF), the nation's reserves have risen at the second-fastest rate among member countries.
Korea saw its holdings jump by $14.3 billion in May from the previous month, the fastest pace besides Russia, whose reserves rose by $20.2 billion during the same period.
Japan ranked third with a monthly gain of $12.5 billion, followed by Hong Kong ($11.7 billion), Germany ($11.2 billion) and Denmark ($10.7 billion). The data excluded China due to an absence of available statistics.
The country grappled with falling foreign reserves last year as the global economic crisis deepened. The central bank provided foreign currency liquidity for cash-strapped banks by tapping the reserves.
As of the end of May, Korea was the world's sixth-largest holder of foreign exchange reserves after China, Japan, Russia, Taiwan and India.
(c&p)
Staff Reporter
The nation's foreign exchange reserves are expected to reach up to $270 billion this year on the back of the large current account surplus and the won's appreciation against the U.S. dollar, according to analysts and policymakers.
The reserves reached a nine-month high of $231.7 billion in June, the biggest since last September when they stood at $239.7 billion. The reserves rose for the fourth straight month in June and were up $30 billion from $217.4 billion in January.
In its latest report, ING Group said that the Bank of Korea (BOK) will use the Korean won appreciation pressure to accelerate the restoration of foreign reserves.
``We remain of the view that the BOK will boost its foreign exchange reserves to at least their May 2008 peak of $264 billion and more likely to $300 billion before accommodating selling pressure and allowing the won-dollar exchange rate to trade below 1,200,'' it said.
The local currency closed at 1,228.5 won per dollar Friday, up 8.3 won from the previous close, and the strongest level since Oct. 14, 2008 and the highest closing this year.
The Ministry of Strategy and Finance also expects the reserves to climb to $270 billion by the end of the year.
``The reserves are likely to exceed the previous record, buoyed by trade surplus, the stabilization of the local currency and an influx of foreign capital searching for local stocks,'' a ministry official said.
According to the International Monetary Fund (IMF), the nation's reserves have risen at the second-fastest rate among member countries.
Korea saw its holdings jump by $14.3 billion in May from the previous month, the fastest pace besides Russia, whose reserves rose by $20.2 billion during the same period.
Japan ranked third with a monthly gain of $12.5 billion, followed by Hong Kong ($11.7 billion), Germany ($11.2 billion) and Denmark ($10.7 billion). The data excluded China due to an absence of available statistics.
The country grappled with falling foreign reserves last year as the global economic crisis deepened. The central bank provided foreign currency liquidity for cash-strapped banks by tapping the reserves.
As of the end of May, Korea was the world's sixth-largest holder of foreign exchange reserves after China, Japan, Russia, Taiwan and India.
(c&p)
Emerging market currencies have soared over the last few months, thanks to a commensurate recovery in investor risk appetite. This trend is on full display in Eastern Europe, where, “The Hungarian currency, which has dropped 14 percent in the past year, has been the best performer in the past three months of the 26 emerging-market units tracked Bloomberg, having advanced 10 percent.” The Polish Zloty, meanwhile, can claim the distinction of best performer against the Euro, having risen 6% in the last month alone. [The chart below, which plots both currencies against the USD, is inverted].
This marks a stunning reversal for these currencies, both of which had fallen by over 40% over the previous six months. Explains one analyst, Poland “is back in favor after Prime Minister Donald Tusk pledged to support the zloty, the International Monetary Fund provided a $20.6 billion flexible credit line and the country posted the only positive quarterly growth rate among the EU’s 10 eastern members.”
As a result, investors are now pouring money into Poland at an even faster rate than they were extracting it during the height of the credit crisis hysteria. “Foreign investors poured 2.6 billion euros ($3.7 billion) into Polish bonds and stocks in April and May,” driving share prices up and risk premiums down. Incredibly, Polish assets still remain cheap by most valuation metrics. meanwhile, its currency has yet to erase the gap with its Eastern European counterparts that was opened last fall, and “Brown Brothers Harriman recommends buying the zloty for gains of 7.4 percent by yearend to 69.3 against Hungary’s forint and of 3.4 percent to 6.33 per Czech koruna.”
Speaking of Hungary, it is projected for “Gross domestic product to drop 6.7 percent this year, the most since 1991. Hungary, along with other emerging economies across Europe, has been hurt by a collapse in demand for its exports including Nokia phones and Audi cars. ‘The Hungarian economy is unlikely to recover from the current recession much before 2011.” The Central Bank recently moved to cut interest rates by a whopping 1%, and may cut rates by a further 2.5% before the year is out. Investors, evidently, are indifferent to this prospect, and continue to push Hungarian stocks, bonds, and currency back towards the levels of the bubble years.
This disconnect between economic fundamentals and asset prices seems to be playing out throughout the EU. On one front, “Bulgaria and the Baltic states of Latvia, Estonia and Lithuania, also EU members, have had to resist pressure to devalue their currencies as eastern Europe’s recession takes its toll.” According to another source, “Nonperforming loans are rising across the EBRD countries and have doubled in the past year in Turkey, Romania, Ukraine and Albania, according to the EBRD. Recent data from national central banks show commercial banks in Romania are no longer collecting interest on more than 8% of the loans they’ve extended, and the figure is nearing 5% in Turkey, where credit cards are already defaulting at a double-digit pace.” At the same time, the Dow Jones Eastern Europe Stock Index just touched a 10-month high. Go figure.
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