A top Chinese bank regulator said Wednesday China will slow its massive lending spree and step up monitoring of banks as it tries to prevent speculative bubbles in real estate and other assets. The announcement sent the U.S. Dollar surging and gold lower as traders tried to hedge against a change in China’s aggressive monetary policy.
According to reports, China's economy expanded 10.7% in the fourth quarter,, fueling worries that their economy may overheat and prompt additional tightening measures. This created a demand for lower yielding assets at the expense of higher risk assets causing the Cash Dollar Index to rally to its highest level in 5 months. Some speculators believe that this signals that the dollar is on it’s way back to it’s 2009 range. However, given the massive US debt, this is probably unlikely.
According to reports, China's economy expanded 10.7% in the fourth quarter,, fueling worries that their economy may overheat and prompt additional tightening measures. This created a demand for lower yielding assets at the expense of higher risk assets causing the Cash Dollar Index to rally to its highest level in 5 months. Some speculators believe that this signals that the dollar is on it’s way back to it’s 2009 range. However, given the massive US debt, this is probably unlikely.
