Brazil and China in plan to axe dollar

Brazil and China in plan to axe dollar

By Jonathan Wheatley in São Paulo

Published: May 19 2009 03:00 | Last updated: May 19 2009 03:00

Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar, according to Brazil's central bank and aides to Luiz Inácio Lula da Silva, Brazil's president.

The move follows recent Chinese challenges to the status of the dollar as the world's leading international currency.

Mr Lula da Silva, who is visiting Beijing this week, and Hu Jintao, China's president, first discussed the idea of replacing the dollar with the renminbi and the real as trade currencies when they met at the G20 summit in London last month.

An official at Brazil's central bank stressed that talks were at an early stage. He also said that what was under discussion was not a currency swap of the kind China recently agreed with Argentina and which the US had agreed with several countries, including Brazil.

"Currency swaps are not necessarily trade related," the official said. "The funds can be drawn down for any use. What we are talking about now is Brazil paying for Chinese goods with reals and China paying for Brazilian goods with renminbi."

Henrique Meirelles and Zhou Xiaochuan, governors of the two countries' central banks, were expected to meet soon to discuss the matter, the official said.

Mr Zhou recently proposed replacing the US dollar as the world's leading currency with a new international reserve currency, possibly in the form of special drawing rights (SDRs), a unit of account used by the International Monetary Fund.

In an essay posted on the People's Bank of China's website, Mr Zhou said the goal would be to create a reserve currency "that is disconnected from individual nations".

In September, Brazil and Argentina signed an agreement under which importers and exporters in the two countries may make and receive payments in pesos and reals, although they may also continue to use the US dollar if they prefer.

An aide to Mr Lula da Silva on his visit to Beijing said the political will to enact a similar deal with China was clearly present. "Something that would have been unthinkable 10 years ago is a real possibility today," he said. "Strong currencies like the real and the renminbi are perfectly capable of being used as trade currencies, as is the case between Brazil and Argentina."

Economists have argued that while the SDR plan is unfeasible now, bilateral deals between Beijing and its trading partners could act as pieces in a jigsaw designed to promote wider international use of the -renminbi.

Any move to make the renminbi more acceptable for international trade, or to help establish it as a regional reserve currency in Asia, could enhance China's political clout around the world.

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日銀、外債を資金供給の担保に　決定会合で議論へ

　日銀は18日、米国債などの外貨建て債券を金融機関に対する資金供給の担保に加える検討に入った。21、22日に開く金融政策決定会合で議論する。金融機関が保有する米国債などを使って日銀から円資金を調達できるようになり、外国金融機関の日本支店などを中心に資金調達の安定性が高まる効果があるとみている。

　日銀が公開市場操作（オペ）を使って資金を供給する際は、金融機関から日本国債などを担保として受け入れる。1999年―2000年にかけて米国債を短期間受け入れたことはあるが、外貨建て資産を担保として認めるのは異例だ。

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国内のＣＯ２濃度が過去最高　岩手・大船渡では２１年間に１割超増加
2009.5.19 15:11

　気象庁は１９日、国内３地点で昨年１年間に観測された大気中の二酸化炭素（ＣＯ２）の平均濃度が、いずれも過去最高値を記録したと発表した。

　観測は毎年、岩手県大船渡市、南鳥島（東京）、与那国島（沖縄）の３地点で行っている。３地点の昨年の年平均値は３８６・６～３８８・５ｐｐｍで、平成１９年と比較して１・７～２・０ｐｐｍ増加した。

　ＣＯ２濃度は世界的に右肩上がりで増加する傾向にあり、日本での観測によると、最近１０年間は年約１・９ｐｐｍの割合で増加を続けている。

　国内で最も古い昭和６２年に観測を開始した大船渡市では、３５１・２ｐｐｍだった当時から、２１年間で１割以上濃度が増加した。

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King fears recovery setback

By Chris Giles and Norma Cohen

Published: May 14 2009 03:00 | Last updated: May 14 2009 03:00

The Bank of England warned yesterday that the "green shoots" now visible in the economy could wither as private sector banks might not have sufficient lending capacity to fuel the recovery.

Disregarding most of the optimism in financial markets and business surveys, Mervyn King, Bank governor, judged that both the short-term and the longer-term outlook for growth had deteriorated since February. The future was highly uncertain, he said.

The Bank's new forecast suggests that a W-shaped recession - a rebound as mothballed factories reopen, followed by another downturn next year - is a distinct possibility. "The risks are weighted towards a relatively slow and protracted recovery," Mr King said.

The governor said that banks would limit their lending because they could not afford losses that might result in their eventual nationalisation. "If the banks are going to continue as private sector entities they will naturally behave in a risk averse way for a while," Mr King said.

Financial Times estimates show the Bank's central projection is for the economy to contract by 3.8 per cent in 2009 and to grow by around 1.1 per cent in 2010. This compares with the forecast of 2.3 per cent growth next year, made by the Bank only three months ago.

However, the Bank thinks the chances of the economy performing worse than this are high, so its risk-adjusted forecast is for another small contraction next year, followed by growth of only 1.6 per cent in 2011. Such weak forecasts would add further pressure to Britain's already strained public finances.

Some economists thought the Bank was being overly gloomy given the pickup in credit in the first quarter. Ben Broadbent of Goldman Sachs said: "To be more pessimistic about lending than three months ago is perverse."

Karen Ward, of HSBC, said: "For what is probably the first time in a number of years, we are more optimistic than the monetary policy committee." She thought quantitative easing would be a bigger spur to lending than the Bank was forecasting.

While other economists thought the Bank was honest in laying out the risks to growth, the emerging consensus was that the Bank is, if anything, too relaxed about the risk of higher inflation. Danny Gabay, of Fathom Financial Consulting, said: "The MPC has ducked the big issue of the day - the potential impact of the surge in government borrowing on future inflation trends."

The weaker-than-expected tone from the Bank affected markets and led to a significant decline in the yield on UK government bonds. Traders saw the report as indicating the Bank would keep interest rates at 0.5 per cent for a lengthy period. Ten-year gilt yields, which have an inverse relationship with prices, fell 14 basis points to 3.51 per cent.