As China’s exporters were hit by the global recession in 2008, the People’s Bank of China began stepping up her intervention programme to prevent appreciation of the Yuan. By April 2011 Chinese state controlled banks had accumulated over one trillion in US treasuries and over 1.5 trillion in other dollar assets. China has indicated she plans to further rebalance her economy towards domestic consumption, and intends to stop buying dollar assets by 2016. (Photo credit: Wikipedia)
A while ago in predicted the currency changes in the market to a number of my colleagues who then could not see the “Sign of the Times” but l was looking at a number of indicators. These were that the Chinese believe in keeping to customs and are steeped very much in the past ,so much so that they would keep their “Sovereign Currency” the Yuan in tact. Their decision on may occasions has been to not devalue, as so many other countries have advised. They have stuck to their guns and the time is coming when this “Third World Currency” will become one that everyone will want to trade!
So to today’ s article in the AFP it deals with changes and how the deals with both London and Singapore will challenge the once “Almighty Dollar“ and how with new free-trade zones opening up ,it could well one day become the “People’s Currency” then where will this leave these oil rich nations. The demise of the “Petro-Dollar ” could we finally see the end of OPEC and their stranglehold on the per barrel price.
AFP – With deals from London to Singapore, China is seeking a greater role for its yuan currency in global markets to challenge the hegemony of the almighty dollar.
The most attention-grabbing reform planned for Shanghai’s new free trade zone is free convertibility of the yuan — also known as the renminbi, or “people’s money” — an unprecedented change which would allow greater use of the currency.
But no timetable has been specified, and a true contest between Mao Zedong, Communist China‘s founding father whose face is emblazoned on most yuan notes, and Benjamin Franklin on the $100 bill will be years in the making.
Chinese currency : Renminbi. (Photo credit: Wikipedia)
For decades the US has benefited to the tune of trillions of dollars-worth of free credit from the greenback’s role as the default global reserve unit.
But as the global economy trembled before the prospect of a US default last month, only averted when Washington reached a deal to raise its debt ceiling, China’s official Xinhua news agency called for a “de-Americanised” world.
It also urged the creation of a “new international reserve currency… to replace the dominant US dollar”.
For China — which has the world’s biggest foreign exchange reserves — the immediate appeal of a greater role for the yuan is lubricating trade flows and drawing foreign investment.
“Policymakers have made new efforts to increase the attraction of the renminbi in global markets,” said Capital Economics analyst Wang Qinwei.
He pointed to a deal with Britain in October allowing London-based institutions to invest directly in China — avoiding an expensive detour via Hong Kong — with an initial quota of 80 billion yuan ($12.9 billion).
A week later Beijing signed a similar 50 billion yuan agreement with Singapore.
China’s central bank, the People’s Bank of China, also signed a currency swap deal with the European Central Bank last month for 45 billion euros ($61 billion), giving euro zone banks greater access to the yuan.
In the run-up to an important plenum of the ruling Communist Party, Zhao Longkai of the Guanghua School of Management at Peking University, said the measures were “important steps” but added that progress was likely to be slow.