Swiss central bank chief resigns over wife's currency trades

[ via LA Times ] 9 Jan

After days of saying he wouldn’t, the chairman of Switzerland’s central bank abruptly resigned Monday, brought low by a swirling controversy over foreign-exchange transactions that made tens of thousands of dollars for him and his wife.

The decision followed weeks of criticism that his integrity had been badly compromised by currency trades made by his wife, Kashya, who took advantage of central bank policies to earn a hefty profit.

Read more: LA Times

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Asia's double-edged currency sword

[ via Reuters ] 2 Jan

The roller-coaster ride for Asian currencies, which saw only the yen and yuan post significant gains for the year against the U.S. dollar, is set to continue in 2012.

While Japan actively sought to stem the yen's rise - drawing U.S. criticism last week - China intervened to ensure the yuan ended the year at a new high. Both currencies appreciated roughly 5 percent in 2011 against the dollar.

The opposite approaches illustrate a dilemma facing Asian policymakers as they try to smooth out foreign exchange rate volatility, which shows no sign of abating in the new year. If the currency is too strong, exports get more expensive. Too weak, and imported inflation spikes and domestic buying power fades.

Read more:  Reuters

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What Japan's New Currency Pact With China REALLY Means

[ via Business Insider ] 26 Dec

The main financial development over the Christmas holiday was an apparent agreement between Japan and China on a wide range of financial issues.  The two key aspects are: an effort to settle more of the bilateral trade in yen or yuan and that Japan will apply to buy Chinese bonds next year.

Japanese officials had already signaled interest in buying Chinese bonds.  Contrary to what several press reports intimate, this is hardly an effect to diversify reserves.  Recall Japan's reserve holdings at over $1 trillion is the second largest in the world behind China.

Read detail analysis at: Business Insider

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Yuan hits all-time high

[ via Reuters ] 26 Dec

The yuan closed up against the dollar on Monday after hitting an all-time high in intraday trading, guided by a stronger mid-point by the People's Bank of China, and looks set for an over-4-percent appreciation for 2011, traders said.

The yuan is expected to remain stable or rise slightly in the last week of the year to close 2011 near 6.30 versus the dollar, in line with market expectations.

Read more: Reuters

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