Lordie, is the media incapable of doing anything more than writing up official remarks?
This is the latest headline, the lead story on the Bloomberg home page right now:
That is a very curious remark, given that the central bank, a mere week ago, issued a report that advocated that the IMF establish a reserve currency “delnked from sovereign nations” to help countries like China have someplace other than the dollar for parking their FX reserves. And this wasn’t the first time China has made noises like that either.
So what is this weird Bloomberg story about? It’s bureaucratic infighting gone public. We wrote back in 2008 that the foreign minsitry and the central bank are at loggerheads about the dollar. The central bank accepts that the renmimbi must rise and China needs to move to a consumer-led economy, but the foreign ministry has the opposite view and wants to keep the Chinese currency cheap.
But even though Bloomberg reported on the central bank’s report and some follow up remarks a few days ago clarifying its positon, the story today gives no clue that the remarks out of China appear schizophrenic (unless one has been paying attention) and are from different parts of the officialdom.
The dollar rose from a three-week low against the euro and erased losses versus the yen after a Chinese official said he was “not aware” of a plan to discuss a new reserve currency at a Group of Eight meeting next week.
The greenback also gained versus 14 of the 16 major currencies after Chinese Vice Foreign Minister He Yafei said he hopes the dollar will “remain stable,” easing concern it will lose its reserve status.
Four paragraphs later, we get this:
Chinese officials have sought a greater role over time for the International Monetary Fund’s unit of account, known as Special Drawing Rights, or SDRs, in an effort to reduce the dollar’s dominance.
So the contradiction is downplayed, and there is no indication that the various officials represent different bodies.