The Chinese yuan advanced the most since the end of the dollar peg, appreciating to 7.5410 against the US dollar today in New York. Subsequently, with major currency weakness throughout the day, the Chinese yuan was able to gain against both the Euro and Pound Sterling as well. Against the euro, the yuan traded higher at 10.28 while trading up at 15.17 against the pound sterling. Supportive of the day’s gains were speculation that rising demand may be gearing up for more Chinese stock sales next week, with two initial public offering slated for public exposure. Guilin Layn Natural Ingredients Corp. and Grangdong Orient Zirconic are both expected to go public next week with the Bank of Beijing set for another subsequent offering.

Chinese Finance Minister Steps Down Amid Claims, Four Additional Officials Removed
Ahead of a Communist Party congress in October, China’s finance minister Jin Renqing resigned for stated “personal reasons” according to the State Council. Purporting the move was an article in the South China Morning Post that revealed the former minister had been accused of improper conduct. Quick to instill stability in the headline government, a replacement has been found in 59-year old Xie Xuren the director of the State Administration of Taxation. Although sparking some cause for concern, the incident has been minimized as sentiment has now spread that the removal of Jin will have limited effects on monetary policy. Incidentally, Xie remains a staunch advocate of President Hu Jintao’s policies, ensuring that currently running regime will remain in place. Separately, four other officials have been removed from office following accusations of corruption. According to Xinhua News Agency, the removal of the officers are but a taste of the Communist Party’s attempt at cracking down on deeply rooted corruption throughout agencies ahead of the aforementioned meeting of party leaders.

Antitrust Law May Keep Foreigners Outside
Potentially blocking further high profile investment in domestic companies, the National People’s Congress has just passed into law an anti-monopoly barrier. To take effect in August of next year, the law would provide the government a window into investigating any company that is seen with more than 50 percent of the country’s market share. The law was mainly passed on the support that officials would be able to see any parties that may be “abusing” their “dominant positions” in the market. As a result, any outside investment of more than 50 percent market share would have to receive approval from the Anti Monopoly Enforcement Authority. Although not enforced, examples close to what the legislation would do have already been emerging. Just last week Carlyle Group was forced to pare back its proposed investment in a duo of deals as Goldman Sachs’ proposed acquisition was blocked by authorities.

Asian Markets Mixed In Overnight Trade, Hong Kong Moves Higher
Hong Kong stocks rebounded on yesterday’s losses, the biggest drop in about two weeks. Helping to support equities higher in the session were upbeat earnings from companies, notably Cnooc Ltd. According to the country’s largest offshore oil producer, first half profit declined less than consensus estimates. Against expectations of a 15 percent drop, the company’s profit fell 11 percent to 14.6 billion yuan for the quarter. Built on cost cutting, the less than expected dip helped to prop shares higher by 35 cents to HK$9.22 as well as supporting PetroChina stock. As a result, the Hang Seng Index was able to add 463.94 points to close 2 percent higher at 23,484.54 in the overnight session. Singapore shares weren’t as lucky, dropping gains in the last minutes of the trading session. For the third day, the benchmark index dipped in the red, losing 13.51 points to close at 3,321.15. CapitaLand Ltd. helped to bring shares lower, finishing down about 0.7 percent to S$7.30 after being up as much as 2 percent. It seems that with subprime concerns still looming over the markets, developers and lenders continued to walk on shaky ground.

Richard Lee is a Currency Strategist at FXCM.