Exchange Rate

China's central bank said Saturday that it would permit more flexibility in the nation's currency — a move that suggested the country was ready to raise its exchange rate modestly against the dollar. In a statement posted on its website, the People's Bank of China said the decision was prompted by recoveries in both the global and Chinese economies. President Obama welcomed the news. "China's decision to increase the flexibility of its exchange rate is a constructive step that can help safeguard the recovery and contribute to a more balanced global economy," he said in a statement.

Group of 20 finance chiefs sharpened their stance against governments trying to influence exchange rates as they sought to tame speculation about a global currency war without singling out Japan for criticism. Two days of talks between G-20 finance ministers and central bankers ended in Moscow on Sunday with a pledge not to "target our exchange rates for competitive purposes," according to a statement. That's stronger than their position three months ago and leaves Japanese officials under pressure to stop publicly giving guidance on their currency's value.

Treasury Secretary James A. Baker III's fingerprints can be found all over the October stock market crash. It was Baker's Louvre accord that caused interest rates to rise sharply in the late summer and fall. The rise in interest rates was the most important factor pushing down stock prices in October. But it was not the only factor. While we will probably never know why the stock markets fell so violently on Oct.

WASHINGTON - Top finance officials of the world's 20 largest economies sought Saturday to allay fear of a currency war, pledging not to target exchange rates to gain a competitive advantage in trade. But the joint statement, issued at the end of a meeting in Moscow of the so-called Group of 20, or G-20, did not single out any country, essentially giving a pass to Japan to keep pursuing its economic policies despite a significant slide in the value of the yen since November. Japan's new government under Prime Minister Shinzo Abe, who will meet with President Obama this week in Washington, had been talking down the yen and has pressed its central bank for more expansive monetary stimulus to break out of its deflationary trap and boost the nation's stagnant economy.

A Canadian man, facing seven years in jail for robbing an upstate New York bank, wants a discount on his sentence to account for his country's weaker exchange rate against the U.S. dollar. Robert Moisescu contends he should serve only four years, because the Canadian dollar is worth roughly 60% of a U.S. greenback. He won a delay of sentencing with the argument, but Dist. Atty. Richard Cantwell was unmoved. "I can't believe that he believes that," Cantwell said. "He knew that ...

The Federal Reserve Board chairman said intervention by major nations can "correct serious exchange rate imbalances," but he added that experience over the years has shown that the effect of intervention is likely to be fairly small and transitory unless part of a larger economic strategy. Separately, Volcker voiced his opposition to a provision in a House-passed tax reform bill that would eliminate the bad-debt reserve deduction for large banks.

The State Bank on Saturday announced a new tourist exchange rate, from 32 rubles to the dollar to 47. In a one-line announcement in the newspaper Izvestia, the bank said the new rate will take effect Monday. The ruble is not traded on world currency markets, and the Soviet government sets various artificial rates for its value.

China has lost faith in the stability of the U.S. dollar, and its first priority is to broaden the exchange rate for its currency from the dollar to a more flexible basket of currencies, a Chinese economist said at the World Economic Forum in Switzerland. Fan Gang, director of the National Economic Research Institute at the China Reform Foundation, said the issue for China wasn't whether to devalue the yuan but "to limit it from the U.S. dollar."

Re "A 'Floating' Chinese Currency Is No Life Raft for U.S. Jobs," Opinion, March 28: Sam Crane correctly argues that China's exchange-rate policies are not a major cause of the huge U.S. trade deficit and that the recent political scapegoating of China is misplaced. When he turns to China's interests, however, he gets some of his economics wrong. He rightly notes that inflation is an emerging problem but wrongly argues that a revaluation would increase inflation. This is backward. Revaluation lowers import prices.

Rudiger Dornbusch, 60, an economist noted for his research on the theory of exchange rates and international economic policy, died Thursday of cancer at his home in Washington, D.C. Dornbusch was a Ford Professor of Economics and International Management at the Massachusetts Institute of Technology. In 27 years of teaching at MIT, he trained many international economic policy scholars and practitioners. He was also a contributor to Business Week magazine for many years.

Any traveler among the former French colonies of West Africa in the early 1990s could have foretold the future of the euro. The prospects weren't pretty. Most countries of Francophone West Africa were then, as they are still, members of a single currency zone very much like the Eurozone. Legal tender for the 13 countries was a pair of essentially identical currencies known collectively as the CFA franc — named from the French acronym for "African Financial Community. " France, which kept the CFA fixed at an exchange rate of 50 CFA to one French franc, had created the zone partially to maintain political ties for its former colonies, but mostly to maintain its mercantile dominance.

BEIJING — China has widened the daily trading range for the yuan in another small step to liberalize its currency. The move, effective Monday, allows the yuan to rise or fall in a single day as much as 1%, double the previous limit. The effort signals a willingness by China to allow its currency to move with market forces. That could help appease trading partners who have long accused Beijing of keeping the yuan artificially weak to give its exporters an advantage over foreign competitors.

BEIJING -- China's yuan weakened against the dollar Monday, the first day it was allowed to fluctuate against the greenback within a wider range. The exchange rate closed at 6.3150, down 0.3% from the 6.2960 daily fixing set by the central bank to open trading Monday. The central bank said over the weekend that it would double the amount the exchange rate could rise or fall in a single day to as much as 1%.  The move is aimed at introducing more volatility into the exchange rate to discourage speculators or capital inflows that could contribute to inflation.

Fast-food giant McDonald's Corp. had a solid fourth quarter, with a profit of $1.38 billion, up 11% compared with the same period a year earlier. Sales jumped 10% to $6.8 billion. But higher ingredient costs, foreign exchange rates, higher tax rates and other matters clouded Wall Street's view of the company's future. At the end of trading Tuesday, McDonald's shares were down $2.20, or 2.2%, at $98.75. In remarks to analysts, executives said menu price increases could be coming on top of the three increases the company instituted last year.

Still reeling from industry speculation that AMR Corp. may be near bankruptcy, the parent company of American Airlines reported a third-quarter loss of $162 million, or 48 cents a share, attributing it mostly to higher fuel costs and unfavorable foreign-exchange rates. The nation's third-largest airline reported that revenue per available seat mile rose 8.1% for the quarter. But airline executives said the higher revenue was eclipsed by a $653-million, or 41%, increase in fuel costs from the same period last year — the last time the company reported a profit.

The lights are still on at the Eiffel Tower. They keep ringing up sales at Prada in Rome, and London is getting ready to start partying for about a year and a half, beginning with the April 29 wedding of Prince William and Kate Middleton at Westminster Abbey. All in all, you wouldn't know that Europe has suffered through an economic crisis as brutal as ours, because strong social programs in the social democracies we love to visit — England, Italy and France — keep people at work, which is part of the problem.

The top U.N. humanitarian affairs official said Monday that the world body had suffered significant losses while delivering cyclone aid to Myanmar because of a distorted official exchange rate. This month, the United Nations issued an appeal for more than $300 million in extra aid to cope with the effects of Cyclone Nargis, which left about 140,000 people dead or missing when it struck the Irrawaddy delta region in early May.

Germany's central bank dealt what may be a lethal blow to Western Europe's system of fixed exchange rates Thursday by making only a token cut in Germany's high interest rates. Traders on the international currency markets, most of whom had expected more substantial action in Germany, immediately began selling the currencies of Belgium, Denmark, Spain and--most significantly--France.

The fuming customers at Chaoyangmen Food Market in Beijing might help accomplish what senior U.S. officials and manufacturers have been unable to do: persuade China to strengthen a weak currency that has kept its exports cheap, but is fueling inflation at home. Rising prices for food, fuel and housing have led to China's worst inflation in more than two years. Growing discontent among ordinary Chinese has the central government scrambling to cushion the fallout from the nation's booming economy.

With China's president set to arrive in Washington next week, Treasury Secretary Timothy F. Geithner on Wednesday laid out a list of concerns that he says the U.S. has with the rapidly rising Asian nation, including unfair government subsidies, theft of intellectual property and its undervalued currency. In a speech ahead of Hu Jintao's state visit next Wednesday, Geithner said that China presents "enormous opportunities for the United States. " U.S. exports to China, he pointed out, are growing at twice the rate of exports to the rest of the world.