Chinese Yuan prepares big slam against the dollar

Skybird · 03-08-12, 08:33 AM

In Decembre, China and Japan had agreed a treaty that installed the Yuan as official payment currency of equal status for the mutual trade between both countries. The dollar'S status got under pressure, loosing market shares in Asia.

I now read in German news that negotiations between China, India, Brazil, Russia and South Africa have succeeded and that from end of March on China will offer credits in Chinese currency. At the same time, and since quite some longer time already, China has been busy with silenty shifting its currency reserves in dollars, replacing dollars with other currencies, or making a hay-day from the European misery and using the money of these dollar-reserves in shopping tours amongst European top-companies.

Having the Yuan being established as an equal trade currency beside the dollar and Yen in trading with Japan, and even more important: establishing the Yuan now the the credit currency with the BRISC countries, has strong consequences that are easy to be underestimated, but i fact are not. I read that the bank HSBC calculates that the share of the Yuan in financial transactions on all Asian markets would rocket from currently 13% (in Asia) to over 50% in 2015. Globally, the dollar currently plays a role in around 85% of all fincial transactions. With the Asian market turning from US to Chinese currency, this unavoidably causes a blow, and the psychological signal will also add to the overall effect.

Many people in Brussel and even more in Washington will hope and pray that the treaty will collapse in the very last minute. The only reply possible for both would be to just print more money that is not covered by a similiar grow in real assets and materiual values of Wetsern economies. What that means for Euro and dollar, is clear: massive devaluation, and an increase in debt burdens. It is this devluation of the dollar that has made China starting to react poissibly earlier than planned and getting ready to take over the global role of premier currency from the dollar, and reducing China'S immense rerseves in (increasingly worthless) dollars. The policy of the US has costed them many hundreds of billions in recent years, in other words the US actively destroys Chinese wealth. Washington certainly did not seriously expect that it would go like this endlessly, forever.

I think the dominance of the Yuan as the world's lead currency will have been established much sooner than I and we have expected just some years ago. The Euro crisis and the American debt crisis forces them to push the pedal earlier than they had wanted.

And no, I do not think they will stop the massive regulation of their currency anytime soon. They would be stupid if they did. after all, what America and Europe do, is massive currency regulation at the cost of the others, too. One has set the precedent to which the Chinese now can refer. Maybe not that clever a move by us, then.

03-08-12, 08:33 AM	#1
Skybird Soaring Join Date: Sep 2001 Location: the mental asylum named Germany Posts: 42,602 Downloads: 10 Uploads: 0	Chinese Yuan prepares big slam against the dollar In Decembre, China and Japan had agreed a treaty that installed the Yuan as official payment currency of equal status for the mutual trade between both countries. The dollar'S status got under pressure, loosing market shares in Asia. I now read in German news that negotiations between China, India, Brazil, Russia and South Africa have succeeded and that from end of March on China will offer credits in Chinese currency. At the same time, and since quite some longer time already, China has been busy with silenty shifting its currency reserves in dollars, replacing dollars with other currencies, or making a hay-day from the European misery and using the money of these dollar-reserves in shopping tours amongst European top-companies. Having the Yuan being established as an equal trade currency beside the dollar and Yen in trading with Japan, and even more important: establishing the Yuan now the the credit currency with the BRISC countries, has strong consequences that are easy to be underestimated, but i fact are not. I read that the bank HSBC calculates that the share of the Yuan in financial transactions on all Asian markets would rocket from currently 13% (in Asia) to over 50% in 2015. Globally, the dollar currently plays a role in around 85% of all fincial transactions. With the Asian market turning from US to Chinese currency, this unavoidably causes a blow, and the psychological signal will also add to the overall effect. Many people in Brussel and even more in Washington will hope and pray that the treaty will collapse in the very last minute. The only reply possible for both would be to just print more money that is not covered by a similiar grow in real assets and materiual values of Wetsern economies. What that means for Euro and dollar, is clear: massive devaluation, and an increase in debt burdens. It is this devluation of the dollar that has made China starting to react poissibly earlier than planned and getting ready to take over the global role of premier currency from the dollar, and reducing China'S immense rerseves in (increasingly worthless) dollars. The policy of the US has costed them many hundreds of billions in recent years, in other words the US actively destroys Chinese wealth. Washington certainly did not seriously expect that it would go like this endlessly, forever. I think the dominance of the Yuan as the world's lead currency will have been established much sooner than I and we have expected just some years ago. The Euro crisis and the American debt crisis forces them to push the pedal earlier than they had wanted. And no, I do not think they will stop the massive regulation of their currency anytime soon. They would be stupid if they did. after all, what America and Europe do, is massive currency regulation at the cost of the others, too. One has set the precedent to which the Chinese now can refer. Maybe not that clever a move by us, then. __________________ If you feel nuts, consult an expert.