Dumping the Dollar! - the ultimate Act of War?

adeptitus said:

Most merchants in East/SE Asia don't accept USD directly, you must go to money changer to convert to local currency first. I travel to Asia 2-3 times/year. There are countries that use USD as legal tender, like Panama. Tourist trap locations are also more likely to take USD currency.

Never change your USD at the airport, except for a small amount to pay for taxi and tip. You get much better rates at money changers in the malls.

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The above statement is completely wrong for Cambodia (as a SE Asia country). Well, we are the country that welcome USD the most! You can use the USD even for filling station, taxi or buying a cigarette without loosing any value at all. The smallest change we accept is $1, if you buy things which cost less than a dollar, you'll get your change in local currency (Khmer Riel). In the capital of Cambodia, Phnom Penh, people have USD in their pocket more than Khmer Riel. Most imported merchandise are sold in USD. If you go to a super market all price tags are in USD!!! You might ask me "why?". Well, but that's a matter of fact. The people used to have no confidence in local currency, longer and longer it becomes a habit. I used to make a joke like this: "the East uses Vietnamese Dong, the West uses Thai Batt and the Central uses US Dollar". You might ask me again, "So, where do people use Khmer Riel?", the answer is "Khmer Riels are for local products and small changes". Poor Cambodia!!!

bd popeye said:

Correct. As some who has traveled extensively I know I can get on a plane right now and go to say Singapore and spend my USD. I can do it in the Gulf states. Even in Saudi Arabia. But come to the US or Mexico or Japan or Singapore and try to spend a Euro. Ain't gonna happen.

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Pound Sterling is very flexible as well - and you get twice the "bang" with it, compared to the buck. :rofl:

Last time I heard the Phil peso is now pegged at 48.

Here's an interesting article on the Chinese foreign exchange reserves:

The Chinese government is taking action to implement a new policy of diversifying the disposal of the country's over US$1 trillion foreign exchange reserves which was initiated by the Central Conference on Financial Affairs three weeks ago.

The Ministry of Finance (MOF) is planning to issue yuan-denominated bonds to raise funds that will be used to "buy out" as much as $200 billion from the country's foreign reserve pool.

To take funds out of the foreign exchange reserves the government must pay the equivalent amount in yuan to balance the books.

At the current exchange rate, the total amount of yuan bonds to be issued by the MOF will be more than 1.5 trillion yuan. The ministry plans to sell the bonds to commercial banks, according to China Business News, a leading business newspaper based in Shanghai.

The $200 billion "bought out" from the foreign exchange reserves will then be injected into a new company to be set up this year to handle overseas investment with foreign reserves.

The new company, tentatively named National Foreign Exchange Investment Company, will be controlled by the State Council, China's cabinet. It will spend funds from the foreign reserves on mergers and acquisitions of overseas businesses, including foreign financial institutions. It will also target overseas energy assets and will likely acquire equities in the domestic markets, or even lend money to help finance domestic research and development projects.

Informed sources say that Lou Jiwei, currently vice minister of finance, will be appointed as board chairman of the National Foreign Exchange Investment Company.

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However, some analysts point out the potential shock effect the operation could have on the stock markets. If 1.5 trillion yuan is absorbed by the bond issuance, the market could face a "liquidity shock".

Many concerns have surfaced. Can the markets bear the shock? Will the purchase of $200 billion be completed in one year or in three years? What will the terms of the bonds be?

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Source:

EDIT: Looks like North Korea might switch to the euro.

In addition, experts believe that the North wants to change to euros because it is under suspicion of counterfeiting dollars. An increase in sand prices could seriously undermine profits for around 20 aggregates firms in South Korea.

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Source:

Vlad Plasmius said:

EDIT: Looks like North Korea might switch to the euro.

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Wait-As payment for its exports? You can't mean that it will use the euro as its currency...can you? You never know with those North Koreans.