GCC states — Bahrain, Kuwait and Saudi Arabia — decided to cut their deposit rates from 3.50% to 3.00% today, following the yesterday’s interest rate cut by the Federal Reserve.
The government of Dubai, U.A.E. largest emirate, is against the currency revaluation and is pro dirham’s peg to the U.S. dollar, according to Sultan Ahmed bin Sulayem, the member of the Dubai’s Board of Executive Council.
Financial experts from the Standard Chartered PLC expect a coordinated scrapping of the peg to the U.S. dollar from the monetary authorities of the Middle Eastern countries - Saudi Arabia, U.A.E., Qatar, Oman and Bahrain.
After two other European central banks decided to hold their current interest rates, Czech and Polish banks chose to follow the same way and didn’t change their reference interest rates despite the fact that they both raised the rates at the end of November.
Swedish central bank left the main interest rate unchanged at 4.00% during the meeting of the Executive Board on 18 December.
Magyar Nemzeti Bank (Hungarian Central Bank) decided today during the Monetary Council’s meeting to hold the main refinancing interest rate at the same level - 7.50%, after the last cut made from 7.75% by MNB on September 25.
Swiss National Bank chose to keep the national three-month Libor (interest rate) unchanged at 2.75% after it was increased by 0.25% back in September 2007. After this announcement Swiss franc gained a little against all other major currencies except the Japanese yen.
Fukushiro Nukaga, Japanese Minister of Finance, joined the “league” of European and U.S. officials in their endeavor to convince Chinese government to take more definite actions aimed towards yuan’s free exchange rate.
Li Yang, an ex-adviser of the People’s Bank of China, suggests a great care in handling any changes to the country’s foreign currency reserves (world’s largest), that are currently composed mainly of U.S. dollars. By the Li’s words, it’s not reasonable to change the vast amount of current reserves, but the new income that goes to the reserves can be exchanged to other currencies.
Chinese yuan will definitely see a some kind of revaluation against dollar and other major currencies soon. Jean-Claude Trichet spoke today about his latest endeavor to convince China government to make confident steps towards stronger yuan policy. From his words the Chinese central bank understands the concerns of their trade partners and the steps will be done eventually to make yuan less depreciated.