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.
Taiwan’s Lee Chia-hao (李佳豪) on Sunday won a silver medal at the All England Open Badminton Championships in Birmingham, England, a career best. Lee, 25, took silver in the final of the men’s singles against world No. 1 Shi Yuqi (石宇奇) of China, who won 21-17, 21-19 in a tough match that lasted 51 minutes. After the match, the Taiwanese player, who ranks No. 22 in the world, said it felt unreal to be challenging an opponent of Shi’s caliber. “I had to be in peak form, and constantly switch my rhythm and tactics in order to score points effectively,” he said. Lee got
‘CROWN JEWEL’: Washington ‘can delay and deter’ Chinese President Xi Jinping’s plans for Taiwan, but it is ‘a very delicate situation there,’ the secretary of state said US President Donald Trump is opposed to any change to Taiwan’s “status quo” by force or extortion and would maintain that policy, US Secretary of State Marco Rubio told the Hugh Hewitt Show host on Wednesday. The US’ policy is to maintain Taiwan’s “status quo” and to oppose any changes in the situation by force or extortion, Rubio said. Hewitt asked Rubio about the significance of Trump earlier this month speaking with Taiwan Semiconductor Manufacturing Co (台積電) chairman C.C. Wei (魏哲家) at the White House, a meeting that Hewitt described as a “big deal.” Asked whether the meeting was an indication of the
‘RELATIVELY STRONG LANGUAGE’: An expert said the state department has not softened its language on China and was ‘probably a little more Taiwan supportive’ China’s latest drills near Taiwan on Monday were “brazen and irresponsible threats,” a US Department of State spokesperson said on Tuesday, while reiterating Washington’s decades-long support of Taipei. “China cannot credibly claim to be a ‘force for stability in a turbulent world’ while issuing brazen and irresponsible threats toward Taiwan,” the unnamed spokesperson said in an e-mailed response to media queries. Washington’s enduring commitment to Taiwan will continue as it has for 45 years and the US “will continue to support Taiwan in the face of China’s military, economic, informational and diplomatic pressure campaign,” the e-mail said. “Alongside our international partners, we firmly
The Ministry of Foreign Affairs yesterday said it has lodged a protest with Pretoria after the name of the Taipei Liaison Office in South Africa was changed to the “Taipei Commercial Office” on the South African Department of International Relations and Cooperation’s (DIRCO) Web site. In October last year, the South African government asked Taiwan to relocate the Taipei Liaison Office, the nation’s de facto embassy, out of Pretoria. It later agreed to continue negotiating through official channels, but in January asked that the office be relocated by the end of this month. As of the middle of last month, DIRCO’s Web
RSS