China Announces That It Is Going To Stop Stockpiling U.S. Dollars

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cancel2 2022

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This isn't good news but not entirely unexpected.

China just dropped an absolute bombshell, but it was almost entirely ignored by the mainstream media in the United States. The central bank of China has decided that it is “no longer in China’s favor to accumulate foreign-exchange reserves”. During the third quarter of 2013, China’s foreign-exchange reserves were valued at approximately $3.66 trillion. And of course the biggest chunk of that was made up of U.S. dollars. For years, China has been accumulating dollars and working hard to keep the value of the dollar up and the value of the yuan down. One of the goals has been to make Chinese products less expensive in the international marketplace. But now China has announced that the time has come for it to stop stockpiling U.S. dollars. And if that does indeed turn out to be the case, than many U.S. analysts are suggesting that China could also soon stop buying any more U.S. debt. Needless to say, all of this would be very bad for the United States.
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At the current moment, a weaker dollar would be better for us, as our biggest problem is a lack of jobs. In the future, when the economy's stronger, it maybe would've helped us had they kept propping the value of the dollar up (to make there currency weaker). But I don't imagine they're ever going to return to that sort of policy again, they're deliberately changing course in order to move away from a cheap labor, export based economy to one based more around domestic consumption. It's not catastrophic or anything, we're still the world reserve currency, and that still boosts the dollar's value and lessens our debt's interests rates to levels they otherwise wouldn't be at.
 
Panda Hugger said:
At the current moment, a weaker dollar would be better for us, as our biggest problem is a lack of jobs. In the future, when the economy's stronger, it maybe would've helped us had they kept propping the value of the dollar up (to make there currency weaker). But I don't imagine they're ever going to return to that sort of policy again, they're deliberately changing course in order to move away from a cheap labor, export based economy to one based more around domestic consumption. It's not catastrophic or anything, we're still the world reserve currency, and that still boosts the dollar's value and lessens our debt's interests rates to levels they otherwise wouldn't be at.
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The Shanghai Futures Exchange (SHFE) may price its crude oil futures contract in yuan and use medium sour crude as its benchmark, its chairman said on Thursday, adding that the bourse is speeding up preparatory work to secure regulatory approvals.

China, which overtook the United States as the world's top oil importer in September, hopes the contract will become a benchmark in Asia and has said it would allow foreign investors to trade in the contract without setting up a local subsidiary.

"China is the only country in the world that is a major crude producer, consumer and a big importer. It has all the necessary conditions to establish a successful crude oil futures contract," Yang Maijun, SHFE chairman, said at an industry conference.


Read More: http://www.reuters.com/article/2013/11/21/china-crudeoil-idUSL4N0J62M120131121
 
LOL, Dude is butthurt and back to groaning all my posts now that the lil' lefty gravedigging campaign got shut down...
 
Aoxomoxoa said:
The Shanghai Futures Exchange (SHFE) may price its crude oil futures contract in yuan and use medium sour crude as its benchmark, its chairman said on Thursday, adding that the bourse is speeding up preparatory work to secure regulatory approvals.

China, which overtook the United States as the world's top oil importer in September, hopes the contract will become a benchmark in Asia and has said it would allow foreign investors to trade in the contract without setting up a local subsidiary.

"China is the only country in the world that is a major crude producer, consumer and a big importer. It has all the necessary conditions to establish a successful crude oil futures contract," Yang Maijun, SHFE chairman, said at an industry conference.


Read More: http://www.reuters.com/article/2013/11/21/china-crudeoil-idUSL4N0J62M120131121
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The Yuan really isn't a credible replacement for the Dollar as a reserve currency until they cease their controls, make it fully convertible, and allow its value to float. This may happen in a few years though, and if there's one currency I'd see as a possible replacement for the dollar as the world reserve currency, it's the Yuan. The reserve currency is typically the one of the most powerful country, after all. Of course, the sheer weirdness of China in the international world may keep it down for a while, but I wouldn't expect it to last forever.
 
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