I wonder what the other half is given the financial sanctions on Russia? China using euros to pay for gas?
Renminbi (RMB)/Yuan Appreciation & Internationalization
- Thread starter supercat
- Start date
The whole point of CIPS is to make Chinese financial activity opaque. The business press doesn't have that data and it's not going to get it.
So if you know about the dual counter program that HKSE is setting up, well there is a lot of logistics and headaches to sort out. This I'm sure is one of many steps they will need to take by first eliminating the stamp tax on duty.
The eventual goal is to make the dual counter program as smooth as possible and reduce the arbitrarge opportunities between RMB and HKD and to make it cheaper to transact in RMB. This is the right approach to go for HK. Allow it to be center of offshore RMB trading so that investors can use HK and its exchange to invest in Chinese stocks and bonds.
This law comes into affect on the 27th and the dual counter mechanism will start in the first half. Along with opening of China and HK and lifting of all restrictions, this should make it more appealing for outsider investors. And I would hope that official in the mainland will listen to HKSE on how they can make this all easier and efficient.
Another good article on GCC and Petroyuan
so the cooperation with GCC countries expected to be very comprehensive and China wants to use Yuan for all these transactions. I hope that expand beyond just buy crude & LNG, but also included in selling of clean/low carbon technology and refinery products.
right again. for GCC states to use RMB, they need to be able to have sovereign wealth fund be able to spend that money in China (from refineries to real estates to government bonds to stocks). I think Shanghai exchanges itself needs further upgrade to handle various contracts, derivatives and such. Having worked with SFE 7 years ago, I can assure you they needed a lot of improvements back then and to be more open. But this is good, central gov't is also pushing exchanges to move faster.
I agree with this, these changes will help China's energy costs and hurt all the US allies competitiveness.
supercat
Major
China donated CNY700 million to Cuba, for which the U.S. couldn't intervene because its China's own currency.
Another article on RMB internationalization and what China might do with respect to petro and gold. I think this really can play out in many ways and a lot of the Yuan transactions are not going to be showing up in SWIFT but rather only in CIPS. Especially the Russian & Iranian stuff. Just as importantly is how many countries will increasingly invest in RMB
Another thought I heard today is that as China is able to pay more of the commodities in Yuan, it will also be able to keep fewer dollar around. As such, it can continue to reduce its treasuries holding so that US gov't can't hold China to hostage by just confiscating those bonds. Of course, this will take a few years to play through. And as American politicians continue to play up the angle of don't let the evil CCP buy up our farmland, China should use this message to encourage its citizens to not buy properties in America for fear of confiscation. I'm sure the Chinese gov't would much rather see their export surplus be spent on own economy or buying up assets and investing in friendly countries rather than America.
Another thought I heard today is that as China is able to pay more of the commodities in Yuan, it will also be able to keep fewer dollar around. As such, it can continue to reduce its treasuries holding so that US gov't can't hold China to hostage by just confiscating those bonds. Of course, this will take a few years to play through. And as American politicians continue to play up the angle of don't let the evil CCP buy up our farmland, China should use this message to encourage its citizens to not buy properties in America for fear of confiscation. I'm sure the Chinese gov't would much rather see their export surplus be spent on own economy or buying up assets and investing in friendly countries rather than America.
discussions on internationalization of RMB in Russia. Talks about increased trade volume between two countries and the increased trading volume on the Moscow Exchange. Russia basically relies on Yuan to keep currency stable and to deal with trade surplus/deficit.
This article is based on Bloomberg article about Russia's reliance on "sanctions-proof Yuan" to fund war effort in Ukraine. A lot of the item in there imo is stupid, like the idea that Russia will be drawing down on its reserves continuously. There is no reason to believe why the discount vs open market will remain low. And if it remains low, China will imo buy more of the Russian oil products which Russia will then re-invest in Chinese financial market with their surpluses. Russia runs a large trading surplus vs China and that is likely to continue.
And even more than that, other countries like Pakistan are expected to pay Russia in Yuan
so as more countries around the world are paying for oil in Yuan to Russia, it will have more customers and less of a need to discount. At this age of high energy prices, it seems quite unlikely for Russia to not be able to accumulate greater reserves of Yuan imo.
This article is based on Bloomberg article about Russia's reliance on "sanctions-proof Yuan" to fund war effort in Ukraine. A lot of the item in there imo is stupid, like the idea that Russia will be drawing down on its reserves continuously. There is no reason to believe why the discount vs open market will remain low. And if it remains low, China will imo buy more of the Russian oil products which Russia will then re-invest in Chinese financial market with their surpluses. Russia runs a large trading surplus vs China and that is likely to continue.
And even more than that, other countries like Pakistan are expected to pay Russia in Yuan
so as more countries around the world are paying for oil in Yuan to Russia, it will have more customers and less of a need to discount. At this age of high energy prices, it seems quite unlikely for Russia to not be able to accumulate greater reserves of Yuan imo.
I have to LOL at this:
Well, the US just took $300 billion of Russia's money. How do you feel about that convertibility, Mark? I think it's great convertibility - it converted the ownership of the money from Russian to American.
The dollar is heavily dependent on the actions of the US Treasury, and one of their actions was yoinking $300 billion.
I mean I think it makes no sense at this point to keep accumulating usd reserves. Buy more gold, stock up even more natural resources and sell more treasuries.