China's new leadership, headed by Xi Jinping, is seeking to support a recovery in the world's second-biggest economy without triggering inflation and a surge in banks' bad debts. Gross domestic product increased 7.9 percent in the fourth quarter from a year earlier, the first acceleration in two years.

Industrial companies' profits rose in December for a fourth month, a statistics bureau report yesterday showed, adding to signs the country's rebound is gaining momentum. Net income increased 17.3 percent from a year earlier to 895 billion yuan ($144 billion), after a 22.8 percent jump in November. Earnings for the full year gained 5.3 percent, down from a 25.4 percent pace in 2011.

Yi, who heads the State Administration of Foreign Exchange, said he's concerned about the potential fallout from expanded asset-purchases programs and near-zero interest rates in the world's advanced economies.

“Quantitative easing for developed economies is generating some uncertainties in financial markets in terms of capital flows,” Yi, who is also head of China's foreign-exchange regulator, told reporters. “Competitive devaluation is one aspect of it. If everyone is doing super QE, which currency will depreciate?”

Eoin Treacy's view The unilateral actions of the Bank of Japan to weaken the Yen represent a departure from the concerted efforts of major central banks in the aftermath of the credit crisis. The result is that as countries seek to protect their self-interest, there have been some larger than normal moves in exchange rates. Nevertheless, what we have seen so far is that the strongest currencies such as those in Asia have pulled back while the weakest have rallied from relatively depressed levels. Quite considerable additional moves would be required to suggest a true “currency war” is underway. (Also see my comments on this subject on Friday).

In addition to pullbacks for the Korean Won, Taiwanese Dollar, Singapore Dollar, Philippine Peso, Thai Baht and Indonesian Rupiah, the offshore Renminbi is also worthy of mention. While the onshore rate has been quiescent, the Dollar has rallied to test its progression of lower rally highs against the offshore rate and a downward dynamic will be required to question potential for some additional upside.