Renminbi (RMB)/Yuan Appreciation & Internationalization
- Thread starter supercat
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We have this view today where Brazil is visiting China and the former Brazilian leader is installed as head of NDB
Which shows closeness between China and Brazil since NDB is HQ'd in Shanghai
We have Lula calling for end of dollar dominance
We had that first deal yesterday
More on Lula's speech today
And we have Hungary now quitting western led banking system
Which shows closeness between China and Brazil since NDB is HQ'd in Shanghai
We have Lula calling for end of dollar dominance
We had that first deal yesterday
More on Lula's speech today
And we have Hungary now quitting western led banking system
How much would CIPS data have? Would you expect the number to be higher than SWIFT data?
Isnt IIB an actual institution that Hungary and Russia are the only members
USD has a lot of life in it since entire financial system has been running on it for decades. But even a slight contraction of USD markets would hit the USA significantly by preventing weaponization of it and making US debt significantly harder to finance without inflation (which would neccessiate high interest rates and/or higher taxes as default which would in turn send US average growth to below 2%).
There is a high amount of US debt. Would shrinking USD market make the interest rate of these debts higher?
Don't know how much CIPS would add to SWIFT total. For China's portion, I would imagine quite a bit, since it's trying to move transactions off SWIFT and onto CIPS
I certainly don't think this is the end of USD as reserve currency. At least not in the near future. I also don't think China is looking to have CNY as the reserve currency, but maybe just the mostly used currency in surrounding Asia block. In the end, it just wants to be able to continue commerce in the even of US sanctions.
I'm looking at USD/CNH trading. The rates right now is 6.87, which still seems high given the renewed likelihood that America is going to cut interest rates. Right now if you are China, you want to see USD depreciate, because that decreases US power around the world. Back 10 years ago, you relied on exports to US, but that's not the case anymore.
In the end, the key is not full abandonnment of USD, but rather fewer people using UST as reserves and use resources as reserves instead. And maybe as countries join BRICS, they want to not use USD and want to use their own currencies. So that alone, will reduce foreign ownership of UST and cause inflation in America, which makes it harder for neocons to finance military expansion.
I certainly don't think this is the end of USD as reserve currency. At least not in the near future. I also don't think China is looking to have CNY as the reserve currency, but maybe just the mostly used currency in surrounding Asia block. In the end, it just wants to be able to continue commerce in the even of US sanctions.
I'm looking at USD/CNH trading. The rates right now is 6.87, which still seems high given the renewed likelihood that America is going to cut interest rates. Right now if you are China, you want to see USD depreciate, because that decreases US power around the world. Back 10 years ago, you relied on exports to US, but that's not the case anymore.
In the end, the key is not full abandonnment of USD, but rather fewer people using UST as reserves and use resources as reserves instead. And maybe as countries join BRICS, they want to not use USD and want to use their own currencies. So that alone, will reduce foreign ownership of UST and cause inflation in America, which makes it harder for neocons to finance military expansion.
Likely yes. De-dollarization of a portion of trade would mean central banks would buy less of it. Which would mean it would be harder to use in non-US financial markets.
What I am not versed at is how China's and other countries trade surpluses are sustainable in a world without a single reserve curreny. Trade surplus is basically giving items in return for an abstraction. If the that abstraction is not useful then you are getting shafted. I'd like to read on this.
basically, you end up seeing your currency appreciate from the surpluses and have to abandon some of the lower end manufacturing. In China's case, China would normally run a huge tourism deficit, so some of the surplus money will go back to the other countries.
And then, you probably also have to do currency swap with the other countries so they can have more RMB. And then you end up holding a bunch of their currency, which you can use to buy assets in their country or exchange it for another currency or use it to buy more resources. I think in China's case, it will be like the Saudis and end up buying a lot of assets or just generally investing in many global south countries, so that they remain dependent on Chinese supply chain and such. You can also use that money to finance infrastructure projects in the other country.
