Refishowcase Business & Finance

China’s government economic adviser said, Beijing might raise interest rates if the consumer price index (CPI) on a one-year 2.25 percent. Currently China’s policy makers were waiting for the CPI report.

Senior researcher Development Research Center, the think-tank institutions China Cabinet, Ba Shusong claimed, Beijing may precede the United States Federal Reserve (Fed) menaikkansukubungaacuanuntuk combat inflation in the country. High inflation makes people worry about withdrawing money from banks for investment in stocks and property so that the potential for manipulation of assets occurs.

“But, not yet decided whether to raise rates only a deposit or deposits and interest on loans,” said Ba told Reuters yesterday. Currently interest rates are one-year loan at 5.31 level persen.Bank Central China (PBOC) controls the amount of deposit interest and loans. Many say that the economy will not PBOC raised interest rates before the Fed do so because higher interest rates in China could lead to surge in the flow of funds.

However, Ba believes the entry of foreign funds was not as great as expected if the increased borrowing costs. The high interest rates will cool the heating in the property sector. Economists predict CPI rose 1.9 percent during 2009 and predicted inflation spike will occur in the coming months.

PBOC researchers believe Jinpu Jiao, inflationary pressures rather than as the main trigger higher interest rates in the quarter I/2010. Problem yuan, Ba rate is still much debate among researchers whether China should let its exchange rate to appreciate (rise) or tidak.Pemerintah China is still careful to change the yuan peg policy. Beijing China export rate is still weak so that changes can membayakan policy.

Brazil Endangered Asset Bubbles

Speculative asset bubble concerns moving from China to Brazil recently strengthened. Speculation has made stock prices and exchange rates in Brazil experienced jumps. Organization of Economic Cooperation and Development (OECD) issued a warning to Brazil as a developing country markets potentially experiencing asset bubbles.

“There is danger of an asset bubble in Brazil or India. We must be careful of these dangers. This is a real threat,” said Chairman of the OECD Angel Gurria. Gurria statement comes as investors awareness of these dangers. During January investors pulled their investments from stock market Sao Paulo for $ 500 million.

Bovespa index had tumbled 4.7 percent during Januari.Ini is the biggest turning point since the Brazilian stock market has rebounded with the recovery of the weakening global economy. Real exchange rate weakened to the lowest position since 2 September 2009. During the nine days of real fell to 1.885 per dolar.Pelemahan was lowered profit last year as a real rose 33 percent on the dollar.

However, Brazilian government says not worried about this threat. “We’re not worried about this because we have foreign exchange reserves (dollars) in large numbers,” said Brazilian Finance Minister Guido Mantega. The Government of Brazil thought through a real devaluation, exports become more competitive. Mantega Brazil earlier economic forecast to grow 5.2 percent this year after zero growth last year.

Memasnya tension on the investment climate in Brazil is triggered by changes in China policy. China-Brazil is a major economic link for the State Panda is the largest trading partner with $ 42 billion in total transactions in 2009. As we all know, Beijing has started a tight monetary policies to cool China’s economy started overheating.

New policy is intended to ease the manipulation of property and stock markets. Some in China worry about the manipulation can destroy the global economic recovery. China new policy is a direct impact on Brazilian exports, particularly in metal products in China and profitable pertanian.Perubahan dollars for other world currencies weaken.