4:48 AM
LONDON | Sat Oct 9, 2010 6:46am EDT
LONDON (Reuters) - Billionaire investor George Soros considers the global currency system "lop-sided" and "controlled" by China, and urged the Asian giant to allow its currency to appreciate.
Soros' comments to BBC radio on Friday, broadcast on Saturday, come as global finance chiefs at a meeting in Washington seek to prevent tensions over currency valuations from derailing a fragile economic recovery.
"One of the basic imbalances that was at the root of the financial crisis and which needs to be corrected is the chronic (trade) surplus in China and big deficit in the United States," Soros said, referring to the 2008 financial crash.
China has kept its yuan currency undervalued in a managed float to keep its exports competitive.
"Certainly a better alignment of those two currencies would help over time to correct that imbalance," he added.
At annual meetings of the World Bank and the International Monetary Fund (IMF) on Friday, finance ministers and central bank governors repeated a call for export powerhouses, such as China, to spend more at home so indebted countries, like the U.S., can rebuild their finances without risking a still-fragile global recovery.
Officials worry that a weak U.S. dollar and relatively strong currencies elsewhere could push nations into a round of currency depreciations to help their exports.
Soros said China's currency should be allowed to appreciate, but a sudden jump of 20 percent or more would lead to reduced exports and unemployment in China, reducing consumption there.
"So you can't adjust the exchange rate too rapidly, but 10 percent a year should definitely be doable. That would mean that you take two years to get 20 percent."
China, which has rebuffed calls from the West to let its currency rise faster, allowed the yuan to firm on Friday to its highest level against the dollar since a revaluation in July 2005.
The IMF and World Bank meetings continue over the weekend.
(Writing by Mohammed Abbas: Editing by Toby Chopra)
3:47 AM
NEW YORK | Fri Oct 8, 2010 7:49pm EDT
NEW YORK (Reuters) - Alcoa Inc (AA.N), the largest U.S. aluminum producer, would be supportive of an aluminum-backed exchange traded fund, or ETF, whether or not it provided metal to back up the security.
Chairman and chief executive officer Klaus Kleinfeld, speaking on a conference call after reporting third quarter earnings late Thursday, said in answer to an analyst's question, "We are totally supportive. I have said that many, many times, totally supportive."
He added, however, challenges remain to actually bringing an aluminum ETF to market, but he was optimistic they would be resolved.
"The structure is one, physical metal premium is another one. And then, the question of what do you do with large redemptions that require large and major cash outflows? So, these things still need to get solved," he said.
Noting RUSAL, the world's biggest aluminum producer, has said recently it would likely supply aluminum as an underlying asset for an ETF [nTOE65S075], the analyst asked Kleinfeld whether Alcoa would do the same.
"Yes, we would definitely be willing to provide metal in here, and we have always said that. We were very supportive. Whether we provide metal or whether not, this is a good thing for the industry to happen," the CEO said, adding the willingness to issue an aluminum ETF was an indication of the light metal's attractiveness.
(Reporting by Carole Vaporean;editing by Sofina Mirza-Reid)
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