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00:00Was the BBC trying to achieve here then. It doesn't seem to this this kind of headline you might have thought a year ago would cause some kind of panic in markets. But that hasn't been the case today well the PRC is responding in fact to the depreciating dollar . What it doesn't want is the yen to be perceived as depreciating against the dollar. So it's forcefully appreciating the yuan . If investors were to view the yen as depreciating against the dollar they might be shaken and it might spur outflows which could jeopardize an improving economy story in the last month or so. The other big story out of China over the last week has been the speculative money going into commodity markets I suppose. And then the regulatory response. Talk us through what's been going on and Chinese commodity speculators retreating now because of this regulatory response it seems well there were some reasons for commodities prices to lift . There's an improving housing market and that has spurred purchases of of all kinds of commodities used in construction and some of the bigger players moving in on this as we saw property prices improve at the the last couple of months and the market generally getting better. But then as is what happened in China speculators got in on the game and the government has put in place a series of curbs at various commodity exchanges throughout China to try to curb that speculation. And what we're seeing here in terms of the drop in volumes at least over the past week since last week's peak may be these curves having an effect on the speculation. Greg thanks for joining us. Great set there in Shanghai bureau . Let's get back to Gary Hathaway chief economist at Gap still with us. Weigh in with your thoughts then Larry on what's going on in China. It seems this this big re fixing story that's happened overnight is not not causing any kind of panic in markets people explaining it is really very rational when you look at what's happened to other currencies and it seems to be in other currencies kind of story. I think that's right. I mean certainly they're following the dollar which is weakening across an array of currencies but there is a Chinese angle on this as well of perhaps two. The first is is that the Chinese authorities would like to create a two way market in the yuan to curb some of the speculation and so opportunities to see a bit of your own appreciation are welcome from that perspective . Secondly it reflects a bit of leeway they have because the economy has improved courtesy of the stimulus measures adopted late last year. And so therefore some movement in the currency is also allowable at this point. Whether you look in China and get nervous. We've had a number of bank earnings out this week a lot of people were focused on levels of debt accumulating in the Chinese economy. That's due to housing or other things. I was looking at this story last week about speculative bubbles in commodities in China and one of my colleagues colleagues describing it as sort of game of whack a mole in terms of the bubbles that keep popping up in China. Where do you see bubbles forming. Oh there's little doubt that in the long run the Chinese economy remains very imbalanced with too much debt too much fixed assets and investment not enough consumption and not enough productivity for that matter as well. So surely those problems which are now well known but remain unaddressed are at the top of the list. But the second one is the strong desire by Chinese residents to accumulate foreign assets those capital outflows have to be managed in a way that is consistent with stability and capital markets as well as stability in the Chinese economy. That's no mean feat in managing those capital outflows and reducing some of these imbalances do you see any activity by regulatory forces in China to take these issues on it. That they're well understood don't they but they act. Are they going to be acted upon. I think on the capital account side for the most part it's been cosmetic it's been these sort of smaller moves around the currency for example or around trying to curb certain parts of the illicit capital outflows with regard to rebalancing. Very little in fact has been done . It's it's it's a big task and they better get on with it .

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Why the PBOC Strengthened Yuan Fixing

China’s central bank responded to an overnight tumble in the dollar by strengthening its currency fixing the most since a peg was dismantled in July 2005. The reference rate was raised by 0.6 percent to 6.4589 per dollar. A gauge of the dollar’s strength slid 1 percent on Thursday after the Bank of Japan’s decision to unexpectedly keep monetary policy unchanged sent the yen surging. Bloomberg's Gregory Turk reports and Gam Chief Economist Larry Hatheway discuss with Anna Edwards on "Countdown."

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