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Kaieteur News
Tuesday November 01, 2015
With climate at ‘breaking point’, IMF gives China’s currency leaders urge advance in Paris prized reserve asset status
French President Francois Hollande (C, 1st row), United Nations Secretary General Ban Ki-moon (4th, 1st row) and Christiana Figueres (3rdL, 1st row), Executive Secretary of the UN Framework Convention on Climate Change, pose for a photo with heads of state and government during the opening day of the World Climate Change Conference 2015 (COP21) in Le Bourget, near Paris, France, yesterday. (REUTERS/Jacky Naegelen) (Reuters) - World leaders launched an ambitious attempt yesterday to hold back rising temperatures, with the United States and China leading calls for the climate summit in Paris to mark a decisive turn in the fight against global warming. In a series of opening addresses to the U.N. talks, heads of state and government exhorted each other to find common cause in two weeks of bargaining to steer the global economy away from its dependence on fossil fuels. French President Francois Hollande said the world was at a “breaking point”. The leaders arrived in Paris with high expectations and armed with promises to act. After decades of struggling negotiations and the failure of a summit in Copenhagen six years ago, some form of agreement likely to be the strongest global climate pact yet - appears all but assured by mid-December. “What should give us hope that this is a turning point, that this is the moment we finally determined we would save our planet, is the fact that our nations share a sense of urgency about this challenge and a growing realization that it is within our power to do something about it,” said U.S. President Barack Obama, one of the first leaders to speak at the summit. The leaders gathered in a vast conference centre at Le Bourget airfield. In all, 195 countries are part of the unwieldy negotiating process, with a variety of leadership styles and ideologies that has made consensus elusive in the past. Key issues, notably how to divide the global bill to pay
for a shift to renewable energy, are still contentious. “Climate justice demands that the little carbon space we still have, developing countries should have enough room to grow,” said India’s Prime Minister Narendra Modi, a key player because of his country’s size and its heavy dependence on coal. One difference this time may be the partnership between the United States and China, the two biggest carbon emitters, who between them account for almost 40 percent of the world’s greenhouse gas emissions, according to the World Resources Institute think-tank. Once far apart on climate issues, they agreed in 2014 to jointly kick-start a transition away from fossil fuels, each at its own speed and in its own way. The United States and China “have both determined that it is our responsibility to take action,” Obama said after meeting his Chinese counterpart Xi Jinping on the sidelines of the summit. “Tackling climate change is a shared mission for mankind,” Xi responded in his own remarks. Obama said the two countries would work together at the summit to achieve an agreement that moves toward a low-carbon global economy this century and “robust” financial support for developing countries adapting to climate change. Flying home to Rome on the papal plane after a visit to Africa, Pope Francis told journalists: “Every year the problems are getting worse. We are at the limits. If I may use a strong word I would say that we are at the limits of suicide.” Most scientists say fail-
ure to agree on strong measures in Paris would doom the world to ever-hotter average temperatures, deadlier storms, more frequent droughts and rising sea levels as polar ice caps melt. SMOG OVER CHINA AND INDIA Facing such alarming projections, the leaders of nations responsible for about 90 percent of the world’s greenhouse gas emissions have come bearing pledges to reduce their national carbon output, through different measures at different rates. As the summit opened in Paris, the capitals of the world’s two most populous nations, China and India, were blanketed in hazardous, choking smog, with Beijing on an “orange” pollution alert, the second-highest level. The deal will mark a momentous step in the often frustrating quest for global agreement, albeit one that on its own is not believed to be enough to prevent the earth’s temperatures from rising past a damaging threshold. How and when nations should review their goals - and then set higher, more ambitious ones is another issue to be resolved at the talks. “The Paris conference is not the finishing line but a new starting point,” Xi said. The gathering is being held in a somber city. Security has been tightened after Islamist militants killed 130 people on Nov. 13, and Hollande said he could not separate “the fight with terrorism from the fight against global warming”. Leaders must face both challenges, leaving their children “a world freed of terror” as well as one “protected from catastrophes”, he said.
(Reuters) - The International Monetary Fund yesterday, as expected, admitted China’s yuan into its benchmark currency basket in a victory for Beijing’s campaign for recognition as a global economic power. The IMF executive board’s decision to add the yuan, also known as the renminbi, to the Special Drawing Rights (SDR) basket alongside the dollar, euro, pound sterling and yen, is an important milestone in China’s integration into the global financial system and a nod to the progress it has made with reforms. To meet the IMF’s criteria, Beijing has undertaken a flurry of reforms in recent months, including better access for foreigners to Chinese currency markets, more frequent debt issuance and expanded yuan trading hours. IMF chief Christine Lagarde, who along with inhouse experts has previously backed the move, made it clear she did not expect Beijing to stop there. “The continuation and deepening of these efforts will bring about a more robust international monetary and financial system, which in turn will support the growth and stability of China and the global economy,” she said in a statement. The currency will have a 10.92 percent share, in line with expectations, after a review of the weightings formula for the SDR, which determines which currencies countries can receive as part of IMF loans. The yuan’s inclusion is a largely symbolic move, with few immediate implications
A vendor holds Chinese Yuan notes at a market in Beijing. (Reuters/Jason Lee) for financial markets. But it is the first time an additional currency has been added to the SDR basket and the biggest change in its composition in 35 years. Last set in 2010, the basket is currently 41.9 percent dollar, 37.4 percent euro, 11.3 percent sterling and 9.4 percent yen. The yuan would not join until October 2016, allowing reserve managers time to prepare. Under the new formula, the euro’s share will drop to 30.93 percent. Sterling and yen will also have lower weights while the dollar remains about the same. To be included in the SDR basket, the yuan had to meet the criteria to be “freely usable,” or widely used to make international payments and widely traded in foreign exchange markets — a yardstick it missed at the last review in 2010. The addition is likely to fuel demand for China’s currency and for renminbi-denominated assets as central banks and foreign fund managers adjust their portfolios
to reflect the yuan’s new status. Currency analysts estimate the IMF seal of approval could fuel demand worth more than $500 billion in coming years and take the yuan’s share of global reserve holdings to around 5 percent, overtaking the Canadian and Australian dollars. › Britain says welcomes Chinese yuan into IMF currency basket “I’m very excited about the yuan joining the SDR basket,” said Chapdelaine Foreign Exchange Managing Director Douglas Borthwick. “I think that it’s going to be very beneficial to the Chinese financial system as they develop a short-term treasury market to really accommodate reserve managers and their holdings of the yuan. So I think it’s all positives.” In a factsheet accompanying the decision, the IMF said that since Chinese interest rates were higher than those of other currencies, it was likely that the SDR interest rate would rise as a result of the yuan’s inclusion.
Dollar hits highest since March, world stocks mixed The dollar hit an eightand-a-half-month high against major currencies yesterday as the prospect of further European Central Bank stimulus dragged the euro down to its weakest since midApril, while oil prices retreated. Global stock markets were mixed, with Wall Street falling ahead of a crucial payroll report Friday, while European shares rose. Still, the three major U.S. indexes were set to end the month higher for a second straight month. The jobs report is arguably the most important U.S. economic indicator due out before the Federal Reserve decides on Dec. 16 whether or not to raise interest rates for the first time in nearly a decade. “The market has largely priced in a December hike and
it would have to take a pretty significant miss with the jobs report to give the Fed some pause before its next meeting,” said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin. The Dow Jones industrial average fell 49.9 points, or 0.28 percent, to 17,748.59, the S&P 500 lost 6.37 points, or 0.3 percent, to 2,083.74 and the Nasdaq Composite dropped 16.24 points, or 0.32 percent, to 5,111.28. The week is expected to highlight the divergent economic policies in the United States and the euro zone, which may set the tone for markets early next year. European shares were lifted by the prospect of the ECB unveiling an extension of its bond-buying programme at a Thursday
meeting. The pan-European 300 index rose 0.4 percent for a 2.3-percent monthly gain. The dollar index, which measures the greenback against a basket of major currencies, was up 0.16 percent despite disappointing data on U.S. business sentiment and pending home sales. It hit its highest point since midMarch and was set for its biggest monthly rise since January. “The market’s really kind of looking through the numbers that are coming out right now and more looking towards the end of the week and central bank discussions,” said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York. The euro fell 0.2 percent against the dollar to its lowest point since April.