’Desperate’ Haven Rush to Boost Norway Krone

Norway’s krone will gain further as investors “desperate” for protection against a deepening European debt crisis turn to one of the few haven markets that isn’t overvalued, said Deutsche Bank AG, the world’s biggest currency trader.
The krone rose more than any other major currency against the franc on Sept. 6, when the Swiss National Bank said it will defend a target of 1.2 against the euro with “utmost determination.” As Swiss efforts to shut the door on franc appreciation force investors to turn elsewhere, the krone will be one of the currencies to fill the vacuum, said Henrik Gullberg, a London-based strategist at Deutsche Bank.
“There is a desperate need for safe havens and the krone is an obvious candidate,” Gullberg said in a phone interview yesterday. “The krone is not significantly overvalued, which is another thing that is attractive.”
The currency has lured investors drawn to Norway’s 10.5 percent budget surplus of gross domestic product last year, the biggest of all AAA rated sovereigns. Norway boasts Europe’s lowest unemployment rate and has been shielded from the worst of the global economic crisis thanks to its oil output. Income from the energy industry is stored in the country’s $540 billion oil fund, helping support the world’s lowest risk of default, as measured by credit default swaps.

China's yuan to be fully convertible by 2015: report

Chinese officials told European Union business executives that the yuan will achieve “full convertibility” by 2015, EU Chamber of Commerce in China President Davide Cucino said.
“We were told by those officials by 2015,” Cucino told reporters in Beijing yesterday, declining to identify the government departments involved. He said the step-by-step process was indicated at a meeting in the last several weeks.
A freely traded currency would mark one of the biggest policy shifts since policy makers embraced private enterprise three decades ago. Such a timeline would help China deflect criticism from US and European lawmakers that the world's second-biggest economy is gaining an unfair advantage in global trade by artificially keeping the yuan undervalued. It would be a year faster than the schedule expected by 57 per cent of 1,263 global investors in a Bloomberg survey published in May.
“Making the yuan fully convertible will lead to foreign inflows into China and a stronger yuan,” said Sacha Tihanyi, a Hong Kong-based strategist at Scotia Capital. “Making the yuan fully convertible is also the key step in pushing it as a reserve currency and enhancing its use in global trade.”
The yuan advanced 0.12 per cent to 6.3863 per US dollar as of 2:17 p.m. in Shanghai, according to China Foreign Exchange Trade System. The currency gained 6.4 per cent in the past year and touched a 17-year high of 6.3705 on August 30. Its 0.9 per cent advance in August was the biggest in 2011.