Currency deal could be near between China and United States

Word comes from New York that negotiators for China and the United States are closing in on an agreement to raise the value of China's currency, a point of contention between the two world economic giants. China's president, Hu Jintao, is scheduled to visit Washington this week, days after a surprise visit to China by U.S. Treasury Secretary Timothy Geithner, according to the Cable News Network (CNN). The United States has been pressing China to allow its currency to float against other world currencies, at least temporarily, to help rebalance the value of trade between the two countries. Analysts say an increase in the value of China's currency, the yuan, will help cut a huge surplus in its balance of trade. "It basically seems like it's a done deal," Ashraf Laidi, chief market strategist for CMC Markets, told CNN. In addition to diplomatic friction, the undervalued yuan is hampering economic recovery in the United States, said Peter Morici, a professor at the University of Maryland. "Unemployment would be falling rapidly and the U.S. economy recovering more rapidly but for the trade deficit with China and Beijing's currency policies." China has been keeping its currency undervalued by buying billions of dollars in U.S. currency and notes, CNN said. Most economists now think the yuan is undervalued by up to 40 percent, but raising its value precipitously could cause more problems than it would solve by overheating China's economy. In that scenario, a gradual increase would be more desirable, CNN said. "The movement from managed currency to freely floating currency is not easy to pull off," Mark Vitner, a senior economy with Wells Fargo Securities, told CNN. "If we have a boom and then a bust in China, that could lead to another global recession." In the short run, raising the value of China's currency will raise the price of Chinese goods sold in the United States while cutting the price of China's imports of natural resources like oil. Hu is expected in Washington next week for U.S. President Barack Obama's worldwide nuclear security summit.

U.S., Russia agree to cut nuclear weapons arsenals

It's remarkable to see how much the world has changed in the past few decades. Not so long ago, an agreement to reduce the number of nuclear weapons held by the United States and Russia would have been greeted by celebrations, especially across Europe. Yet this week, a treaty signing that would do precisely that barely was noticed in the United States. Yes, it's true, it took some personal diplomacy involving U.S. President Barack Obama and Russian President Dmitry Medvedev, but a deal between the world's most nuclear-armed nations to cut weapons stockpiles by a third was signed Thursday in Prague, according to Cable News Network (CNN). Obama called the new Strategic Arms Reduction Treaty (START) an indication of the two countries' commitment to "responsible global leadership" while Medvedev called it a "win-win situation" for both countries. "This day demonstrates the determination of the United States and Russia -- the two nations that hold over 90 percent of the world's nuclear weapons -- to pursue responsible global leadership," Obama said Thursday. "Together, we are keeping our commitments under the Nuclear Non-Proliferation Treaty, which must be the foundation for global nonproliferation." Medvedev, too, acknowledged the potentially historic impacts of the new treaty. "This agreement enhances strategic ability and, at the same time, allows us to rise to a higher level of cooperation between Russia and the United States," Medvedev said. For U.S. residents who remember the days when public buildings had fallout shelters and schoolchildren participated in fallout shelter drills, the agreement is a welcome sign of real progress since the Cold War between the United States and the old Soviet Union. Of course, the new agreement is merely a continuation of the previous START deal that expired in December, and still leaves both countries with more than 1,000 nuclear warheads. Just as important in the short term, perhaps, Obama and Medvedev also discussed other related issues, such as developing nuclear power Iran, before the signing ceremony, CNN said. The weapons reduction agreement is still subject to ratification by each country's legislature. Obama and Medvedev wrapped up the new agreement shortly before the scheduled start of a global nuclear security summit in Washington on Monday.