Australia's treasurer has warned that a "huge tsunami" will engulf global financial markets when China bows to international pressure and floats its currency.
"That will be a wild ride when that happens," Peter Costello told the Sydney Morning Herald in an interview published yesterday. "That will set off a huge tsunami that will go through world financial markets."
Costello has been treasurer for the past 11 years, presiding over an economic boom in Australia driven by China's hunger for resources and is heir-apparent to Prime Minister John Howard.
Expanding on his dire prediction in a radio interview yesterday, Costello said China should float its currency but warned of major volatility when that happens.
"The day they decide to float their currency you are going to get huge reversals of financial flows around the globe, which will affect all exchange rates, that's why I compared it to a tsunami," he said.
Costello denied that his warning was aimed at persuading Australia's central bank not to raise interest rates at its board meeting on Nov. 6, just weeks before general elections.
Meanwhile, the Australian dollar traded yesterday at its highest level against the US currency since it was floated 23 years ago, boosted by speculation interest rates would be hiked early next month. At 4:45pm the Australian dollar was at US$0.91, against US$0.89 a week ago.
Robert Rennie, head of Westpac's foreign exchange strategy, said attention appeared to have switched back to fundamentals, including the widening spread between Australian and US benchmark government bonds.
The yield spread between Australian and US two-year government bonds reached 2.9 percentage points this week -- the widest since May 2004.
"We're starting to move away from slavishly watching what US equities are doing and are likely to do and more toward the fundamentals," he said.
Rennie said Wednesday's release of third-quarter consumer price data had been a catalyst for the shift in focus. The data showed Australia's underlying inflation was at the top end of the 2 percent to 3 percent range the Reserve Bank of Australia (RBA) aims in to keep inflation within.
"I think we're we're going to see a significant possibility of the Fed cutting rates by 25 basis points next week to 4.5 percent, while the RBA is likely to raise rates next month and possibly the following month so that takes you to 7 percent," he said.
"That's a 250 basis points differential which has to be good news for the Aussie," he said.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique