The Chinese are continuing the charge to get their currency the Yuan or Renminbi as its called locally, to be used to pay for international trading debts.
This could pose a threat or at least change to the US dollar as the world’s reserve currency. I’m not saying it’ll happen this year.
But the decline in the dollar’s value is self-evident. And continues without fail. So preparing now in your long-term holdings is good. Get long term investments out of dollar denominated assets.
For the short-term there are many trading opportunities.
Here’s more from Euro Money:
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China faces a new currency challenge as the prospect of a slowdown in its economy heightens, which is likely to result in a renewed push towards the internationalization of the renminbi.
Talk of the renminbi usurping the dollar as the world’s reserve currency has been replaced by concerns that China is struggling to contain capital flight.
The latest figures from the People’s Bank of China provide confirmation that foreign investors were pulling money out of China in the final quarter of 2011.
Data from the Chinese central bank show that there was a Rmb27.9 billion ($4.4 billion) reduction in the renminbi positions of financial institutions accumulated from foreign exchange purchases in November, after a fall of Rmb24.9 billion in September.
With foreign investors repatriating capital at the fastest pace for 11 years, the renminbi has been under sustained pressure. This has ensured continued dollar sales from China’s vast foreign exchange stockpiles to keep the currency stable.
“With the trade deficit narrowing, foreign capital being withdrawn, and the dollar enjoying healthy demand, the PBOC is facing an incredibly difficult task to thwart the pressure for currency depreciation,” says Michael Derks, chief FX strategist at FxPro.
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Full story at Euro Money.
China’s experiencing a slow down and pressure on its currency. But as the US continues to abuse its place as the world’s reserve currency by wild and reckless overspending the calls for a new reserve currency will only grow to deafening levels soon.
More stories at FAP Turbo blog.
