Posts Tagged ‘Weend Update’
Weekend update
Because of a business trip to Luxembourg, I have not been able to comment on some important news during the week. Looking back, we saw that:
(1) Euro/Dollar traded for the first time in history above the 1.60 level. We are now starting to see additional signs of a European economic slowdown. According to the Manufacturing Purchasing Managers Index (PMI) released by the NTC Economics, manufacturing weakened in April. The strong euro affected New Export Orders as they contracted for the first time in almost three years, from 51.1 to 49.8.
Some countries and sectors in the Euro Zone will likely cope better than others, as the euro strengthen against the dollar. Strong Chinese demand will primarily benefit the exporting sector related to capital goods and high tech consumer goods, mentioned here.
(2) Chinese foreign exchange reserves recorded a record increase in the first quarter. China added $153,92bn to their current reserve, compared to $94,63bn in the forth quarter of last year, making it a total of $1682,18bn.
So far in 2008, the renminbi has appreciated 4.5 % to the U.S. dollar. If Chinese policy makers continue their present currency interventionist program, domestic inflation will get an additional shot of adrenalin, as foreign capital continues to flow into China.
