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US's Snow wants China exchange rate move"now"

http://biz.yahoo.com/rf/030930/economy_china_snow_2.html

WASHINGTON, Sept 30 (Reuters) - U.S. Treasury Secretary John Snow told lawmakers in a letter earlier this month he wanted to see China move to a more flexible exchange rate"now" and promised he would keep up pressure on Beijing to do so.

In the letter to senators, dated Sept. 12 and a copy of which was obtained by Reuters, Snow reiterated his view that intervention in currency markets should be kept to a minimum.

"It is clear to me that China should move toward greater flexibility in its exchange rate," said Snow's letter."I would welcome a move toward greater flexibility now."

Snow was responding to a request from Democratic senators Charles Schumer and Evan Bayh and Republican senators Elizabeth Dole and Lindsey Graham to investigate whether China's pegged exchange rate is harming the U.S. economy.

The bipartisan group said China's artificially weak currency makes Chinese exports cheap, undermining U.S. producers' sales abroad and leading to job losses in the beleaguered U.S. manufacturing sector.

In his letter, Snow said foreign competition is not the only reason for manufacturing job losses in the United States.

But he said he would"continue to encourage the Chinese authorities to move toward freer trade, freer capital flows, and greater exchange rate flexibility."

Snow wrote to the senators after returning from a trip to China, where he met government officials and tried to persuade them to make changes to their exchange rate regime.

The authorities said they would move to a more flexible but did not set a time frame.

U.S. Treasury Undersecretary for International Affairs John Taylor is due to testify to Congress on China's exchange rate on Wednesday.

The yuan, or renminbi, is pegged at around 8.28 per dollar, enforced by the central bank.

Beijing buys about $10 billion a month to keep the exchange rate stable, and on Monday the central bank said foreign exchange reserves swelled to a record at the end of August.

Snow told the lawmakers he disapproved of intervention.

"As you know, I believe that currency values are best determined in open trading markets with intervention kept to a minimum," the letter said.

Japan, meanwhile, confirmed earlier on Tuesday that it intervened in the foreign exchange markets through the U.S. Federal Reserve, selling yen for dollars in an attempt to weaken the yen.

The dollar has taken a pounding, pushing the yen, the euro and other currencies to stronger levels, since a Sept. 20 meeting of the Group of Seven finance ministers. They agreed that flexible exchange rates are preferable to pegged ones and that currency values should be set in financial markets.

Treasury's annual report on the currency practices of U.S. trade partners is due to be released on Oct. 15 and Snow is expected to testify on it shortly thereafter.
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Emerald.

PS: Euro/US$ 1.30? Warum nicht schon im Oktober 2003, die Amis sind total
am Anschlag!