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Chinese RMB and the US Dollar

Discussion in 'General Forex Talk' started by Pharaoh, Jun 8, 2011.

  1. Pharaoh

    Pharaoh Colonel

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    Looks like China's plan for dumping the dollar..., er, I mean diversifying its holdings of foreign reserves are continuing.

    Looks like the plan is to continue gradually, since if China dumped all it's dollar holdings (estimated to be somewhere around 2 trillion USD) at once, things would be unpleasant.

    Further, although China says they don't want the Yuan to appreciate suddenly, "The market conditions for two-way movement of the yuan exchange rate are gradually coming into existence.

    Dollar holdings risky - SAFE official
     
  2. MichelAnge21

    MichelAnge21 Sergeant

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    It s time to put the USA in the scam alerts folder.

    USA, PAY YOUR CLIENTS NOW OR GO OUT OF BUSINESS
     
    #2 MichelAnge21, Jun 9, 2011
    Last edited: Jun 9, 2011
  3. Bastian Rubben

    Bastian Rubben SunbirdFx Representative

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    I do no think that china can drop the USD. As you mentioned, China holds a huge amount of American dollars so China is kind of trapped between her will to get loose of the USD, and the fact that an extreme actions can hurt China as bad as they would do to the US.

    Bastian Rubben,
    Chief Analyst, Sunbird
     
  4. MichelAnge21

    MichelAnge21 Sergeant

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    Of course, China is trapped. China has a long-term plan and they certainly wont sink the US dollar themselves. They are simply pissed that it s the USA that is sinking the Greenback. They need some kind of defensive strategy to protect their assets ( I m pissed also: all my USD long trades went very bad. Now I m convinced the USD is a basket case ).

    They have been quietly proposing for some time already that the US dollar could be replaced as a global reserve currency with a composite virtual currency ( where the US would still be a major part of the index BTW like 60% ). International payments could be settled with the composite currency.

    No, what I find most interesting in the article that Pharaoh posted is that they are now considering making the renminbi an exchangeable currency outside their own border ( but they did not use " free-floating " ) Having the chinese currency available for trading in forex pairs would be most interesting.
     
    #4 MichelAnge21, Jun 9, 2011
    Last edited: Jun 9, 2011
  5. Pharaoh

    Pharaoh Colonel

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    LMFAO!!!!!!!


    Yeah, China is in a bad way. If they dump too quickly, it damages the value of the holdings they haven't dumped. It also would damage the ability of their largest customer, WalMar..., er, I mean the USA to pay for all those exports that keep the Chinese factories going.

    Of course, China wants to break this heavy chain between themselves and the USA. That's why they are diversifying their foreign assets, increasing their gold reserves, and pushing for more domestic usage of their factory production.

    BTW - A very few brokers do offer RMB pairs. The problem is that it floats in a limited range each day, so it's not a "genuine" market to trade in. I am encouraged that the article points towards at least widening the trading band if not finally moving into a fully exchangeable free-floating system.
     

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