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13 June 2020
China has a long and winding road ahead to catch up let alone overtake the US dollar as the dominant currency in the world.
The yuan’s share of currency reserves is below 2% while the US dollar commands 60.8%.
The latest figure from the Swift system showed that the Chinese currency accounts for just 1.66 per cent of international payment transactions in April versus the 43 per cent for the US dollar.
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https://twitter.com/KittySn52889207/status/1271605034275373056?s=19
Amanda Lee in Beijing and Karen Yeung
Published: 7:15pm, 12 Jun, 2020
Amid growing tensions between China and the United States, Beijing is renewing its push to internationalise the use of the yuan in Southeast Asia under its globe-spanning belt and road infrastructure drive.
China is stepping up efforts to reduce a reliance on the US dollar for bilateral trade with countries across the region, from Cambodia to Vietnam, as friction with Washington causes uncertainty in trade and financial markets for the world’s second largest economy.
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China-Asean trade rose by 1 per cent year-on-year to US$1.6 trillion in the first five months of 2020 and accounted for 14.7 per cent of China’s trade volume, Chow said.
The US and the EU, traditionally China’s largest trading partners, accounted for 11 per cent and 13.9 per cent, respectively.
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Despite growing trade with Southeast Asia, the yuan’s share of currency reserves has barely changed since it became a world reserve currency in 2016, sitting at below 2 per cent, according to the International Monetary Fund.
The US dollar remains the world’s dominant reserve currency, with 60.8 per cent of allocated reserves in the last quarter of 2019.
International use of the yuan is limited compared to the dollar – the latest figure from the Swift system showed that the Chinese currency accounts for just 1.66 per cent of international payment transactions in April versus the 43 per cent for the US dollar.
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11 June 2020
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The euro and renminbi are likely to boost their share of global reserves, but at a gradual pace, UBS said. The euro’s share was around 20% at the end of the second quarter, IMF data showed, while the renminbi was at roughly 2%.
U.S. dollar to remain dominant currency; euro, renminbi rising gradually: UBS survey
NEW YORK (Reuters) – The U.S. dollar will remain the world’s leading reserve currency over the next 25 years, with the euro and renminbi expected to further increase their share of total central bank reserves, according to UBS’ survey of sovereign institutions including major central banks released on Wednesday.
Global reserves are assets of central banks held in different currencies primarily used to back their liabilities. Central banks have bought and sold international reserves to influence exchange rates.
The dollar currently represents about 60%-65% of global currency reserves reported by central banks to the International Monetary Fund.
That share may come down a bit over the next two decades, only because central bank managers would want to raise their holdings of other reserve currencies such as the euro and renminbi, said Massimiliano Castelli, head of strategy and advice, global sovereign markets, at UBS Asset Management and one of the authors of the report.
The euro and renminbi are likely to boost their share of global reserves, but at a gradual pace, UBS said. The euro’s share was around 20% at the end of the second quarter, IMF data showed, while the renminbi was at roughly 2%.
“In the end, what we think will actually happen over the next 25 years is that as we move on, we will have a world where we will have three important currencies: the dollar, euro, and renminbi,” Castelli told Reuters on Tuesday.
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The UBS report noted that the dollar remains the “ultimate safe-haven currency” and during periods of intense global risk, investors flock to U.S. Treasuries.
The Swiss bank also cited the dollar’s role as a global anchor for prices and interest rates, which can force central banks to hold excessive U.S. dollar reserves to match the significant dollar exposure from trade and borrowings of their respective economies.
In the renminbi’s case, the U.S.-China trade conflict has not slowed down the growing interest of central banks of holding this currency. But this issue though is likely to lower the rise of renminbi in global reserves given the uncertainty surrounding the Chinese economy, the UBS report said.
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Nataliya Dembinskaya writes for Sputnik France.
Sputnik is frequently described as a Russian propaganda outlet.[3][4][5] In 2016, Neil MacFarquhar of The New York Times wrote: “The fundamental purpose of dezinformatsiya, or Russian disinformation, experts said, is to undermine the official version of events — even the very idea that there is a true version of events — and foster a kind of policy paralysis.” The Russian government rejects the validity of such assertions.[6] In early 2019, CNN Business reported that Facebook had taken down hundreds of pages on its social media platform passing as independent news sites but were actually under the control of Sputnik employees. Sputnik called the move “clearly political in its nature and…practically censorship.[7]
https://en.wikipedia.org/wiki/Sputnik_(news_agency)
Stalker Zone is anti-capitalist, anti-war, and anti-liberal.
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Stalker Zone
Preparing for the Worst: China Sells US Government Debt Due to the Devaluation of the Dollar
The Federal Reserve’s printing press is working at full capacity: the regulator is fighting against the economic crisis by flooding the markets with cash. For the first quarter alone the monetary issue exceeded $2 trillion. The result – a $26 trillion national debt and the risk of the devaluation of the dollar. China, the second largest foreign lender to the United States, decided not to wait for the devaluation and is actively selling off American debt securities.
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Everything is being sold off
According to the Chinese portal Sohu, the Chinese authorities decided not to wait for the depreciation of the dollar and started selling off the US public debt.
Beijing concluded that Washington cannot solve its economic problems without the help of a printing press, so investments in American public debt are extremely risky.
Indeed, if since 2008 the US Federal Reserve has printed only about $8 trillion, then it will add $5 trillion more before the end of the 2020, with clear consequences for the exchange rate.
Last year China got rid of $110 billion in treasuries, and recently – another $10 billion. In May Washington threatened Beijing with its refusal to pay back debt obligations. According to the White House, it should be the People’s Republic of China that pays for spreading the coronavirus and concealing information about the pandemic.
Even then, the oldest English-language newspaper South China Morning Post in Hong Kong specified that China will continue dumping American securities, depending on how the situation with compensation claims develops. Now, the risks of the depreciation of the dollar, which still accounts for a significant part of Chinese reserves, have been added.
According to analysts, China’s sale of even a part of the treasury portfolio is extremely unpleasant for the US: Beijing will hit the government bond market at a time when Washington has sharply increased its issuance to finance programs to combat the pandemic and its economic consequences.
Because of the trade war with the US, China was already systematically getting rid of these securities. As a result, by June 2019 Japan claimed first place in the ranking of foreign holders of the American national debt: Tokyo has 1.12 trillion in treasuries. As the latest report from the US Treasury showed, by February the Chinese portfolio had shrunk to $1.09 trillion — from $1.32 trillion in November 2013.
Nataliya Dembinskaya
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The risks are rising that the dollar could lose its special global standing
PUBLISHED SUN, JUN 9 2019
8:30 AM EDT
UPDATED SUN, APR 19 20203:33 PM EDT
James McCormack, Fitch Ratings
There are a number of factors suggesting that, over time, the US dollar may be at risk of surrendering its position as the world’s global reserve currency, argues Fitch Ratings analyst James MacCormack.
Economic sanctions and protectionist trade initiatives are two of the leading causes.
China and the euro zone have been actively touting their currencies as reserve and transaction substitutes.
Read the article here:
https://www.cnbc.com/2019/06/07/the-risks-are-rising-that-the-dollar-could-lose-its-special-global-standing.html
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