When Premier Wen Jiabao addresses China’s largely ceremonial parliament, investors will prick up their ears for any hint that change is coming to the country’s currency regime. Wen, who swore there would be no more surprises, after Beijing revalued the yuan by 2.1 percent in 2005, will err on the side of caution in choosing his words. But any emphasis on enhancing exchange rate flexibility rather than maintaining stability will fuel speculation that China may be about to let the yuan rise again after effectively re-pegging it to the dollar since mid-2008. Some economists reckon that Beijing might have a one-off revaluation up its sleeve. Many others think it will move only haltingly to resume appreciation. Here is a look at various scenarios of what might happen. De facto peg maintainedIf the Chinese export lobby gets its way, the yuan will stay locked in place until external demand recovers strongly. The Commerce Ministry has repeatedly insisted that a stable yuan has benefited both China and the world during the global financial crisis. Double-digit annual growth in exports is all but assured in coming months due to a low base of comparison in early 2009, but policymakers will be looking at month-on-month numbers for more solid evidence of recovery. Sequential growth momentum went into reverse in January, with exports down 16 percent from December. Resumption of gradual appreciationMany analysts expect Beijing to let the yuan start strengthening again sometime in the next few months, given growing inflationary pressures and the nascent […]

The US Department of Justice has approved a $9bn merger between the NYSE Euronext and Deutsche Börse contingent on divestitures. For the deal to be fully permitted by the DOJ, Deutsche Börse will need to divest its 31.5 percent interest in stock exchange operator Direct Edge. It is also still awaiting the approval by the European Union. Deutsche Börse agreed to acquire NYSE Euronext in February, which will create the world’s biggest stock exchange operator.

The owner of British Airways, International Consolidated Airlines, on Thursday beat competitor Virgin Atlantic in the takeover battle for BMI, Deutsche Lufthansa’s loss-making airline. IAG agreed to buy BMI for €206.8m in cash, but may end up paying less if Lufthansa fails to sell its small regional subsidiaries before the completion date.  CEO of IAG, Willie Walsh, said: “Buying BMI’s mainline business gives IAG a unique opportunity to grow at Heathrow, one of our key hub airports.” Walsh added there will be job cuts in an effort to stem losses at BMI. Reports suggest the sale will be completed in the first three months of 2012. 

Japan has sold the yen in the market for the first time in six years, trying to stop the currency’s relentless climb from hurting exporters and threatening a fragile economic recovery. Fresh after a victory in party leadership contest, Japan’s Prime Minister Naoto Kan appeared to be stepping up efforts to wrench the country out of deflation by targeting yen strength, which has weighed on stock prices and corporate profits. Estimates vary on how much Japan has spent so far in its first intervention in the foreign exchange market since spending 35 trillion yen in 2003-2004. Dealers talk about 300-500 billion yen ($3.61-6.02bn) though some reports put it closer to 100 billion yen. The US dollar extended its gains against the yen after an official at Japan’s Ministry of Finance said intervention was not finished, climbing more than two percent on the day above 85 yen and nearly two yen above a 15-year low. The action pleased its target audience: major Japanese exporters. “We applaud the move by the government and the Bank of Japan to correct the yen’s strength.” Japan’s number two automaker Honda Motor Company said in a statement. Honda has pencilled in the yen at 87 to the dollar in its financial estimates for the 2010/2011 business year. The Bank of Japan will not drain the money flowing into the economy as a result of the yen selling, sources familiar with the matter said, indicating coordinated efforts with the government to support the economy. The central bank […]

Britain’s AAA credit rating could be at risk due to the crisis in the eurozone, Moody’s said in its UK end of year assessment late on Tuesday. In spite of a “stable” rating, Moody’s warned that Britain may face a downgrade if no policies are implemented to help stabilise markets. According to the agency, the current rating is based on its strong institutions, government finances and low susceptibility to external event. It cautioned, however, that the future of the ranking is dependent on whether or not a resolution is found for the sovereign debt crisis. “The significant increase in the government’s deficit and debt stocks since 2008 has eroded its ability to absorb further macroeconomic or fiscal shocks without rating implications,” the ratings agency said.