CHINA

Global markets celebrated on Monday at the merest hint that China would let its currency appreciate, showing just how badly the Middle Kingdom is needed to drive a recovery in the sagging world economy.

Global markets celebrated on Monday at the merest hint that China would let its currency appreciate, showing just how badly the Middle Kingdom is needed to drive a recovery in the sagging world economy.

The Australian Dollar has rallied more than one cent this morning after Friday night's close to trade over 0.8800 after the PBOC (People's Bank of China) announced on the weekend that it will make the RMB exchange rate more flexible in the future but will still maintain a trading band of +/-0.5%.

China's signal that it will ease its currency's 23-month-old peg to the dollar will spare the country from U.S. lawmakers' wrath only if it opens the door to significant upward movement in the yuan.

Policymakers in the world's major economies will closely monitor the Chinese yuan this week for signs it is actually moving after Beijing announced it would make its exchange rate more flexible.

China will keep the yuan's exchange rate at a basically stable level, the central bank said on Sunday, suggesting that the country's new currency regime will look a lot like the old one.

Tensions in global financial markets stemming from the euro zone's sovereign debt crisis appear to be easing, setting the stage for investors to dip back into risky assets in the second half of this year.

China's decision to end the yuan's nearly two-year peg against the dollar will boost its stock market heavyweights, as it heralds a long-term yuan appreciation based on robust productivity growth and aids an economic adjustment toward less reliance on exports.

Following are forecasts by bankers and strategists on the level of expected yuan appreciation after China ditched its peg to the U.S. dollar.

Workers at a plastics parts supplier for Toyota Motor Corp in China resumed work on Sunday, ending a three-day strike over pay and benefits, state media said.

SAIC Motor Corp , China's biggest automaker, said it was planning a private placement of new shares and trading in its stock will be suspended from Monday.

China's announcement that it will resume currency reform made waves globally but caused barely a ripple at home on Sunday, with major newspapers merely reprinting the central bank's statement.

China will gradually make the yuan's exchange rate more flexible, the central bank said on Saturday, indicating that it was ready to break a 23-month-old U.S. dollar peg that has come under intense fire from abroad.

China said on Saturday it would gradually make the yuan more flexible, in a gesture that may deflect foreign criticism at next week's G20 summit but will not quickly yield a big move by its currency.

Treasury Secretary Timothy Geithner welcomed China's decision on Saturday to make its yuan exchange rate more flexible, but said the test is how far and how fast they let the currency appreciate.

China on Saturday said it would gradually make the yuan more flexible, in a gesture that may deflect foreign criticism at next week's G20 summit, but will not quickly yield a big move by its currency.

Below is a full text statement from The People's Bank of China on the yuan's exchange rate as posted on their website (http://www.pbc.gov.cn/english/detail.asp?col=6400&id=1488).

China will gradually make the yuan's exchange rate more flexible, the central bank said on Saturday a week before a G20 summit, strongly suggesting that it was ready to break the currency's 23-month-old dollar peg.

Treasury Secretary Timothy Geithner said on Saturday he welcomed China's decision to make its yuan exchange rate more flexible, and called for vigorous implementation of the change.

According to World Gold Council (WGC) figures, India has retained its position as world's largest gold consumer in the first quarter owing to a 49 percent recovery in demand, thanks to peak wedding and festival season. Gold imports stood at 739 tonnes during the period April 2009 - March 2010.

Toyota Motor Corp avoided a prolonged suspension of production at its main Chinese car factory when a strike at a plastic parts supplier was settled on Saturday.