One US dollar will be worth 18,932 Vietnamese dong tomorrow, up from 18,544 since February. This 2.1 per cent devaluation is the third since November of last year. The move will help exports in a country recently downgraded by Fitch.
Recent dong devaluations:
(1) November 2009 (16,992->17,941, 3.4 per cent);
(2) February 2010 (17,941->18,544, 5.6 per cent).
Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, has just delivered a very interesting speech in Marquette, Michigan, on the shores of Lake Superior. His focus was basically educational: to explain how the Federal Open Market Committee functions – though he did have a message for the markets – that their negative reaction to last week’s monetary policy statement was “unwarranted” and the US economy was in no worse shape than they thought before the meeting.
But in the meantime, he waded into the debate over whether the US is facing a worrying structural shift in the labour market that could lead to high unemployment rates for a very long time. Read more
When Wolfgang Schäuble, Germany’s finance minister, next meets his European counterparts, will he be heaped with praise – or brickbats? Germany’s economy is on a roll. It grew by 2.2 per cent in the three months to June, its best quarterly performance since reunification in 1990. But that has not necessarily gone down well with colleagues in other European capitals.
Unnoticed beyond his tiny country’s borders, Jean-Claude Juncker, Luxembourg’s prime minister, earlier this month launched an extraordinary attack on German economic policy, according to the Luxemburger Wort. Germany’s success was based on “wage and social dumping,” Mr Juncker is reported as having said. “The way Germany went about improving its competitiveness, I would not like to see in our country.” Since the launch of the euro in 1999, German workers had seen a meagre 12 per cent rise in wages, whereas his countrymen saw a 41 per cent rise, he went on. Read more
China will allow foreign central banks and overseas lenders to start investing in the country’s domestic interbank bond market for the first time, in a move aimed at encouraging internationalisation of the Chinese currency.
The People’s Bank of China, the central bank, said on Tuesday it had launched a pilot project to allow greater foreign access to its largely closed domestic interbank bond market in order to “encourage cross-border Rmb [renminbi] trade settlement” and “broaden investment channels for Rmb to flow back [to China]”. Read more
UK inflation during July remains the highest among the G7, up 3.1 per cent year-on-year. While consumer prices have been flattening in the eurozone and the US – even stoking fears of deflation – UK inflation remains above 3 per cent as it has been all year. The index is down slightly from 3.2 per cent in June.
Energy is driving the rise, via transportation itself affected by the rise of prices of fuels and lubricants. Transportation price rises have been driving UK inflation since autumn of last year, accelerating at the start of 2010 with a 12-month rate above 10 per cent. Annual transportation prices are now 7.8 per cent up on last year. Read more
Upbeat minutes just released from the Australian central bank show that though the domestic situation looks healthy, falling inflation and increased uncertainty over the global outlook informed the decision to hold rates at 4.5 per cent.
Causing envy to major central banks, no doubt, the RBA is firmly focused on growth. The graphic, right, shows it was the most popular word from the minutes (credit: Wordle). Excerpts below:
Growth in Australia’s trading partners had been very strong, at around 6 per cent in export-weighted terms over the year to June.
While growth had been boosted by fiscal stimulus over the past year and a half, this would be reversed in the period ahead as public investment declined following the completion of stimulus-related projects.