Tuesday, March 18, 2008

Qatar, China and the Dollar

'China increasingly is blaming an influx of cash from speculative investors known as 'hot money for a host of economic ailments and has pledged to cut the inflow. ... Analysts say foreign investors have been getting around China's strict capital controls and pouring funds into the country, as they try to profit from the rising yuan and high interest rates", WSJ, 10 March 2008.

"Qatar, the world's largest exporter of liquified natural gas, may revalue its currency or end its peg to the dollar as soon as next month, Qatari Central Bank officials said. ... Qatar's prime minister, Sheikh Hamed bin Jassem Al Thani told news agency Zawya Dow Jones that the emirate was studying delinking its currency from the dollar", WSJ, 12 March 2008.

The Chinese created their problem by not floating the yuan. As soon as the yuan floats and the dollar sinks, the "hot money" will go somewhere else.

Qatar: stop studying, just do it.

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