Millionaire Vincent Balloré is backing a new venture by his eponymous firm in Paris and now London: rechargeable electric cars. Starting next year, in addition to Boris bikes in London and Vel’libs in Paris, people will be able to rent cars for an hour or two at a time. And unlike other systems run by car rental firms like Avis, the as yet unnamed London Balloré version will not require that renters return the car to the same charging station.
Cost will be £10/hour. The Balloré Paris electric car, called “Autolib”, is the star of the recent anti-smog campaign. Unless a car has 3 or more passengers, it can only be used on odd or even days this week (based on the license plate number.) But non-polluting electric cars are exempt. The City of Lights is suffering from Los Angeles-style inversion. Its mayor has also made all public transport (buses, metro, and in-city RER) free for Parisians to improve the air quality.
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Currencies matter a lot, especially when investing (as we do) globally.
Today’s developments include a climb-down by the Westpac Bank‘s chief currency strategist Down Under, Billy Evans. He withdrew his forecast that the Reserve Bank of Australia (their central bank or CB) would cut interest rates. With employment rising in Oz, he now thinks a yield cut “faces a high hurdle.”
Last week China created a “wrong-way” risk for currency trades. The People’s Bank of China, the CB, increased the daily spread for fluctuation in China’s Renminbi (RMB or Yuan) to 2% each way from the morning fixing against the US$. Earlier, the spread was only 1% each way.
So in the course of a day, the RMB now can move as much as 4%. This increases the CB’s flexibility as it will not have to intervene in markets as much.
But there is another motive: to stop the yuan going only one way against the Greenback, up, as it did before 2014 for years. Chinese speculators could count on near-certain gains if they bought ever-strengthening RMB against dollars temporarily. Lately the RMB has tended to fall which might have encouraged Chinese to speculate by buying dollars or engage in capital flight. Now Chinese speculators can’t be certain that they got the best inter-day price.
There is another reason: China is losing its export edge as the RMB rises, and this is worrying Beijing. Moreover it wants to ease up the controls on its finance sector by liberalizing interest rates and letting other vehicles compete with bank deposits.
And ultimately a global role for the RMB will require that the currency be tradable and variable.
We are playing both a stronger A$ (the result of continued high interest rates) and Chinese export strength.
