China Blasts U.S.; Yuan Hits Record Level

Today China reported a very large $27.1B trade surplus for October. Chinese authorities allowed the Yuan to appreciate significantly, to the strongest level against the dollar since 1993. The move may be seen by some as a gesture to placata critics ahead of the G20 meeting, just like the massive gains of the US dollar yesterday.

 

The ETF to use is CYB, which will move the opposite way to the above chart.

We track all currency ETFs live here. These moves will do wonder for our currency straddles.

In the meantime, however, the world continues to pound the U.lS. for QE2, just ahead of the G20 meeting in South Korea, a meeting, for which the final declaration has already been written.

China continues to criticize the U.S. for QE2. Zhu Guangyao, Chinese Vice Finance Minister:

“We have $10 trillion of hot money flowing around,”  told reporters in Beijing on Nov. 8. The U.S. “has not fully taken into consideration the shock of excessive capital flows to the financial stability of emerging markets,” he said.

China also announced measures to contains the inflow of capital.

South Korea happens to have $293B of foreign exchange reserves, over 10X what it had in July 1997. This is what Lee Myung Bak, South Korean President, had to say:

“The international community united as one spirit during the crisis,”  “There are doubts over whether such cooperation can be achieved now the global economy is entering a recovery phase, with each country growing at a different pace.”