To focus on the second round of the U.S. monetary policy of quantitative easing (QE2) will be in all the debate early this morning the answer.

The second round of the so-called quantitative easing policy, namely, by buying government bonds to keep interest rates low to stimulate lending and spending. Analysts pointed out that if the United States came out the second policy of quantitative easing is likely to cause a chain reaction, forcing the European countries, followed by a new round of global quantitative easing policy.

The scale of U.S. monetary policy of quantitative easing in excess of market expectations, the dollar will accelerate the process. As the international dollar-denominated commodities, the dollar will inevitably rise in commodity prices fall. Purchase of commodities in China will pay a higher price, in addition to the hands of China will be a corresponding depreciation of U.S. dollar assets.

The subject of a new round of quantitative easing has been in the past two months, the dollar fell sharply, if the Fed announced that the quantitative easing measures smaller than expected, the dollar could rebound.

Affect Sino-US exchange rate is an important factor is to see the scale of quantitative easing Fed. 500 000 000 000 -8000 if the scale billion, the RMB appreciation may restore a state, and the dollar will not significantly decrease; if the size of more than 1 trillion yuan appreciation would not be followed, the dollar appears deep Sharply; size reached 1.5 trillion U.S. dollars, the dollar will fall more.

More importantly, the Fed once again if the quantitative easing measures, a lot of money is bound to lead to flock to emerging countries, which may be followed by dishing out a second wave of ‘austerity’ policy.

Just the day before yesterday, India and Australia also announced a rate hike. Especially in Australia in the third quarter CPI increase of 0.7% qoq, an increase of 2.8%, lower than market expectations, the significant easing of inflationary pressures, the central bank to raise interest rates suddenly unexpected.

Shao Yu Yuan Securities Research principal analyst believes that the international factors, the U.S. will implement the second round of the quantitative easing policy brought about by the ample global liquidity, so that Australia, India and other countries to bear greater inflationary pressures, management of inflation expectations to increase the urgency of a sudden. Therefore, the central bank Reserve Bank of Australia, and India has also announced interest rates to hedge in advance of its U.S. QE2 inflationary pressure, and curb inflation.

China also faces the possibility of international capital inflows, the appreciation pressure on RMB exchange rate, decline in export competitiveness, economic slowdown and other issues will follow. Means of international capital into China’s monetary authorities to release the base currency, excess liquidity will lead to inflationary pressures, the possibility of another interest rate has increased.

This also raises the vigilance of the Chinese currency policy makers, by the recovery of uncertain factors, economies more cautious policy of withdrawal, with the gradual maturity of the original stimulus, the developed economies began to introduce new economic stimulus measures, the global liquidity and monetary conditions remain accommodative, the major economies will continue to ease monetary policy is expected to stimulate the economy strong, large funds may be the faster growing emerging economies inflows. In the ample liquidity and a strong background of inflation expectations, the surplus funds must find ways and exports, the potential to be highly concerned about inflationary pressures.

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