China 'planning Tobin tax' on currency trading - business live

Discussion in 'Market News' started by Lily, Mar 15, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    All the day’s economic and financial news, including rumours that Beijing is pondering tighter currency controls

    10.25am GMT

    A new opinion poll showing that Britain is more likely to vote to leave the European Union has hit the pound.

    Sterling has shed around 1% this morning, from $1.43 to $1.416 against the US dollar, after the Daily Telegraph reported a narrow lead for the Brexit campaign.

    10.02am GMT

    Women’s leggings, coffee pods, microwave rice and computer game downloads have all been added to the ‘basket of goods’ used to measure UK inflation, while CD Roms and nightclub fees are out.

    9.19am GMT

    European stock markets are fallen by around 0.6% in early trading, after Japan’s central bank struck a gloomier tone after today’s monetary policy meeting.

    In London, the FTSE 100 has shed 41 points or 0.7% to 6133.

    The up-trend that had become established off those mid-February lows is looking set to fail and this is knocking confidence in the natural resources sector in general, although the miners are finding themselves under added pressure this morning as Antofagasta becomes the latest in the sector to axe dividend payments.

    8.44am GMT

    There’s drama in Bangladesh this morning too, where the central bank governor has resigned following one of the biggest cyber thefts ever.

    “I resigned and the prime minister accepted it,”

    8.25am GMT

    Experienced City analyst George Magnus believes China would lose any hopes of challenging the supremacy of the US dollar if it imposed a levy on financial transactions.

    RMB as reserve currency RIP. Not that it was likely anyway but now as controls tightened, China plans Tobin tax.

    8.21am GMT

    Christopher Balding, professor of economics at Peking University, believes Beijing could be preparing to weaken the yuan again.

    Serious question: explosion outward investment, Tobin tax, tightening capital this leading up to a surprise depreciation?

    8.12am GMT

    American macroeconomist James Tobin first pitched the idea of a transaction tax in the 1970s. He suggested a small levy on every financial transaction to ‘throw sand in the wheels’ of reckless speculation.

    It’s a popular idea in among critics of the current financial system, who believe it could raise funds to pay for the financial crisis and avoid a repeat.

    China's said to draft Tobin tax rules on FX trading, while this may provide near-term stability, it counters internationalization plans.

    A Tobin tax could deter legitimate yuan transactions, reduce liquidity & make it harder to hedge (tough to differentiate from speculators).

    8.04am GMT

    China is reportedly planning a new transaction tax on currency trades, in a new attempt to tighten control of its financial system.

    The initial rate of the so-called Tobin tax may be kept at zero to allow authorities time to refine the rules, said the people, who asked not to be identified as the discussions are private. The tax is not designed to disrupt hedging and other foreign-exchange transactions undertaken by companies, they said.

    Imposing a levy on foreign-exchange trading would be the most extreme step yet by policy makers to prevent speculative bets against the Chinese currency, after state-run banks repeatedly intervened to support the yuan and the government intensified a crackdown on capital outflows.

    7.48am GMT

    Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

    Central bankers are in the limelight again today. Overnight, the Bank of Japan has left monetary policy unchanged while it watches the impact of its recent move into negative interest rates.

    The focus of the session was the Bank of Japan, who ultimately delivered…. very little. It certainly seems that the BoJ have little desire to lower the deposit rate deeper into negative territory.

    Continue reading...

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