Reply #42: (Currencies watch) (1:) EU Wants Trichet, Almunia, Juncker Mtg With China

[Ghost Dog]

BRUSSELS (Dow Jones)--European Union governments want the bloc's chief economic officials to travel to China before the end of the year to press for a more flexible yuan exchange rate, an E.U. official and an E.U. diplomat said Thursday.

European Central Bank President Jean-Claude Trichet, European Commissioner for Economic and Monetary Affairs Joaquin Almunia and Luxembourg Prime Minister and Finance Minister Jean-Claude Juncker, who chairs the meetings of E.U. finance ministers, went to Beijing in November 2007 to discuss concerns about the country's currency.

Senior economic officials from E.U. countries suggested a repeat trip at a meeting in Brussels last week, the E.U. diplomat said. E.U. countries, particularly the 16 states that share the euro, say a stronger yuan is needed to slow Chinese exports and encourage a balanced global economic recovery.

China let the yuan, which had long-traded in a narrow band around 8.28 to the U.S. dollar, appreciate about 17.5% between July 2005 and July 2008. Since then, it has kept the currency trading close to 6.83 to the dollar.

The yuan-euro exchange rate has moved in the opposite direction in recent months, rising to a recent high of CNY10.18 Wednesday from a low around CNY8.57 in February, a depreciation of almost 19%.

A weaker yuan gives Chinese manufacturers a sharp advantage over euro-zone rivals, creating a particularly painful problem for Germany, the region's largest economy and the world's largest exporter.

Similar conditions existed two years ago, when Trichet, Almunia and Juncker traveled to Beijing to meet Chinese Premier Wen Jiabao, Finance Minister Xie Xuren and People's Bank of China Governor Zhou Xiaochuan.

On that trip, Juncker, who also chairs monthly meetings of euro-zone finance ministers, told Chinese officials that "the fact that the Chinese currency is depreciating against the euro, and by contrast is appreciating against the U.S. dollar is creating a lot of problems for the European economy."

/... http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=6a9b3d0d-c05b-4660-aec4-929bb1425788

(Meanwhile...)

Tony Blair's bid for the presidency of Europe may have been struggling to make headway, but today it hit a rock when he won the endorsement he must secretly have been dreading.

In a letter published in an Italian newspaper, Silvio Berlusconi threw his less than colossal moral authority behind his old friend's candidacy. The man who promised to put Britain "at the heart of Europe", but chose to stay out of the euro and maintain border controls, had "all his papers in order to become the first president of the European council under the terms of the Lisbon treaty", the Italian prime minister declared.

/... http://www.guardian.co.uk/world/2009/oct/14/silvio-berlusconi-backs-tony-blair