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The Chinese Renminbi Closer to Free Floating Exchange Rate

China is taking a major step today towards integrating their currency (RMB) into the worlds foreign exchange market. The controlled peg set by their government has been allowed to float within a marginal band against a small basket of currencies around a fixed rate since 2005. The government has announced that they will gradually increase its flexibility and this latest announcement seems to confirm that. The undervaluing of the currency has been said by some to unfairly allowed China to continue to stay overly competitive with rival economies for exporting goods*. The Official Chinese news agency Xinhua noted: “The move could also help China deflect criticism of its currency policy ahead the annual spring meeting of the IMF in Washington next week.”

*The RMB has risen in value gradually over the last 7 years by around 30 percent, but many, especially those in the US believe this isn’t enough.

The CityAM is running a front page article this morning detailing that Graduated Face Earnings Slump. It breaks down data from the Incomes Data Services (IDS) that when taking into account inflation graduate starting salaries have fallen in the last decade. With the cost of studying a degree rising significantly in recent years coinciding with a push for more school leavers to pursue higher education, unsurprisingly the competition for roles is high. With an estimated 46 graduates per application, no wonder employers aren’t in any rush to increase starting salaries. However I do thing this is a complex argument, the economy has stuttered at a time when the student fees have been increased and there has been a political push to rise the numbers attending university. I don’t think that is wrong that a person pays the cost for self improvement and better career opportunities, as long as there is access for all. However as the UK begins to flirt with the American style of University, I would hope that companies take into account the extra debt that recent graduates have paid for the privilege to study and reimburse accordingly.

Manchester United are expected to take a second attempt at an IPO in Singapore this year. After last years pulled IPO, the clubs American owners are still looking to capitalise on the international brand and the huge Asian following. However the owners valuation of the club at £2bn has been described by some analysts as “inflated”.

Credit Suisse could announce job losses of 5,000 in its investment banking arm according to a report in Sontag newspaper yesterday. It was said to have quoted a senior management member at the bank, and it would be announced at the fourth coming Q1 results.

Headlines:

Top Euro banker calls for boost to IMF - The Wall Street Journal

Barclays’ tax deals face US scrutiny - Financial Times

UK Home Sellers South Record Prices in April, Rightmove Says - Bloomberg.com

Six percent of UK’s wealthiest pay less than 10 percent tax - Reuters

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