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U.S. May Hit National Debt Ceiling in 2004
The Associated Press
Monday 16 June 2003
WASHINGTON -- The government could hit the new $7.4 trillion limit on the national debt next year_ any time from April through October, Treasury Department spokesman Rob Nichols said Monday.
President Bush last month signed a bill allowing a record $984 billion increase in the amount the federal government can borrow. It marked the second increase in the debt ceiling in roughly a year. In June 2002, the debt ceiling was increased by $450 billion to $6.4 trillion.
The issue is politically touchy. Democrats have blamed the government's need to borrow more on Bush's tax cuts, his handling of the economy and ballooning federal government budget deficits. Republicans have blamed the weak economy and the costs of fighting terrorism for the need to extend the debt limit.
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China May Cut its Link to Dollar
By David Smith
The Times
Monday 16 June 2003
CHINA may be ready to break the link between its currency and the dollar, rather than track the falling American currency, analysts believe. The hugely competitive Chinese economy has been greatly helped by the dollar's fall, which has pulled its currency, the renminbi yuan, lower against the euro and yen.
The currency link has prevented America getting the full benefits of the dollar's depreciation, and it has also intensified the pressure on exporters in Britain and Europe.
According to a new analysis by Goldman Sachs, China seems ready to soften the dollar link. It expects the dollar to drop gradually against the yuan, falling from its present 8.28 to 7.86 in the coming months.
Jim O'Neill, head of international economics at Goldman Sachs, said China was coming under mounting pressure to break the currency link. A fall in the dollar against the yuan would also allow it to depreciate against other Asian currencies.
"We see the dollar's weakness as a catalyst in producing a 'regime shift' in the management of the Chinese currency," he said. The bank expects China's economy to grow by 7% this year, despite the effects of the Sars virus.
Gerard Lyons, head of global research at Standard Chartered, said a rise in the Chinese currency would be a key factor for the world economy.
"If you talk to G7 countries they will say that's what is needed," he said. "But there will be those in China who will continue to argue that market stability and continued strong growth are more important."
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