China to start direct currency trade with euro, bypassing USD

[devil21]

This sounds important.

http://finance.yahoo.com/news/china-...--finance.html

China will begin direct trading between its yuan currency and the euro starting on Tuesday, the national foreign exchange market's operator said, as Beijing seeks to broaden the unit's global usage.

The China Foreign Exchange Trade System already offers a platform for yuan-euro transactions but direct trading means the US dollar will not be used as an intermediary currency to calculate rates, according to a statement released Monday.

The market operator said the move aimed to promote bilateral trade and investment, facilitate the use of yuan in cross-border trade and lower conversion costs.

In June, China started direct trade between the yuan and Britain's pound, one of several currencies to be included in a streamlined regime.

China has long had direct currency trade with the United States, and in recent years has added Japan's yen, the Australian dollar, the New Zealand dollar and Malaysian ringgit.

Beijing keeps a tight grip on the capital account -- investment and financial transactions, rather than those related to trade -- on worries that unpredictable inflows or outflows could harm the economy and reduce its control over it.

But China is seeking greater use of the yuan -- also known as the renminbi (RMB) -- in line with its status as the world's second-largest economy and to challenge the US dollar, analysts say.

"Direct trading brings together the RMB with the world's second-most actively traded currency and is a significant step in (the) RMB's globalisation," said Ryan Song, head of markets for China at British bank HSBC, which is acting as a market maker for the new pair.

"The trade and investment ties between China and the European Union, as two of the world's major economies, can be further strengthened through the greater convenience of direct trading in this pair," he said in an HSBC statement.

The yuan closed at 7.8085 to the euro on Monday, according to the China Foreign Exchange Trade System.

[twomp]

Wait a minute here, hold the phone! According to some around here, the U.S. and Nato took down Gaddafi to preserve the dollar's dominance. Doesn't Britain and the EU trading with China in yuan kind of destroy that theory?

[Demigod]

Wait a minute here, hold the phone! According to some around here, the U.S. and Nato took down Gaddafi to preserve the dollar's dominance. Doesn't Britain and the EU trading with China in yuan kind of destroy that theory?

The EU had many other reasons to attack.Gaddafi was blackmailing the EU for money in order to stop immigrants,the French and UK presidents needed a populist boost at home because of the economical problems,there was a lot of money in Italian banks they could confiscate + the oil.The Scandinavians joined because they are socialists who can't miss an opportunity to fight for the "greater good ".

[FindLiberty]

Oh oh... MOR TURRURISTS?

Direct currency trade bypassing the USD = act of war.

[devil21]

Wait a minute here, hold the phone! According to some around here, the U.S. and Nato took down Gaddafi to preserve the dollar's dominance. Doesn't Britain and the EU trading with China in yuan kind of destroy that theory?

Preserving and spreading western central bank's power to control whatever the chosen currency of the moment is, is more on target in the bigger picture imo. It's the dollar at the moment but that will change once every country has a western central bank installed. Controlling the money means controlling the resources. Libya built the largest water aquifer in Africa and didn't borrow from any western central bank to do it.

[Zippyjuan]

The conversion from yuan to dollars to Euros was only being done on paper anyways- figures were being converted first to dollars to calculate the amount in dollars and then recalculated to how many Euros in terms of dollars. The dollar was not being bought and sold to complete the transactions so it really doesn't effect the dollar at all.

The China Foreign Exchange Trade System already offers a platform for yuan-euro transactions but direct trading means the US dollar will not be used as an intermediary currency to calculate rates, according to a statement released Monday.

[devil21]

The conversion from yuan to dollars to Euros was only being done on paper anyways- figures were being converted first to dollars to calculate the amount in dollars and then recalculated to how many Euros in terms of dollars. The dollar was not being bought and sold to complete the transactions so it really doesn't effect the dollar at all.

One less use for the old FRN, eh?

[TheCount]

One less use for the old FRN, eh?

Don't worry, China still buys assloads of dollars to keep their currency low.

[devil21]

Don't worry, China still buys assloads of dollars to keep their currency low.

Source? Fancy chart requested.

[Zippyjuan]

Pretty chart. Not quite what you asked for though. Figures for June.
http://www.bloomberg.com/news/2014-0...f-the-day.html

European Central Bank President Mario Draghi’s plan to weaken the euro to aid exporters faces a $4 trillion challenge: how to cope with China’s efforts to diversify reserve assets, most of which are now in dollars.

The CHART OF THE DAY tracks China’s total reserves, Treasury holdings and share of global foreign-currency reserves, along with the performance of the yuan and euro since the start of 2013. The People’s Bank of China buys dollars to help stop the yuan strengthening and these purchases helped boost its currency reserves by $126 billion to a record $3.948 trillion in the first quarter. China holds about a third of the world’s international reserve assets excluding gold.

Better chart:

http://marketrealist.com/2014/05/chi...ers-rates-low/

[TheCount]

Source? Fancy chart requested.

http://origin.www.uscc.gov/sites/def...20Holdings.pdf

“The RMB is obviously undervalued by a very large amount because China bought about $500 billion in 2013 to keep it from rising (and, as best we can tell, is intervening at a similar pace this year),” Mr. Bergsten wrote. “This means they are buying about $2 billion every working day to keep the dollar’s price up and the RMB’s price down!”

http://blogs.wsj.com/chinarealtime/2...ate-continues/

[devil21]

Neither Zip nor Count's posts appear relevant but at least I got some fancy charts to look at.

[Natural Citizen]

Here is some relevant reading... http://www.ronpaulforums.com/showthr...=1#post5653359

[Natural Citizen]

Neither Zip nor Count's posts appear relevant but at least I got some fancy charts to look at.

Google searches cannot really see into the future. Although they are useful for finding junk that supports the model that guide our perception. And so you get what you get.

[devil21]

Here is some relevant reading... http://www.ronpaulforums.com/showthr...=1#post5653359

Thanks.

I've been tracking this steady move away from USD since 2008 and documenting it since 2009 in this thread:
http://www.ronpaulforums.com/showthr...-the-US-dollar

The articles became so frequent that I stopped updating the thread. It should be obvious to anyone paying attention where this is going.

[TheCount]

Neither Zip nor Count's posts appear relevant but at least I got some fancy charts to look at.

What post would be relevant to the fact that China is steadily buying dollars?

[devil21]

What post would be relevant to the fact that China is steadily buying dollars?

2 year old charts to demonstrate what China is doing right now?

Your charts weren't as fancy as Zippy's either.

[TheCount]

2 year old charts

Apparently you didn't read any of the supporting material.

Are you able to see the dates at the bottom?

[devil21]

Apparently you didn't read any of the supporting material.

No, I didn't. Your charts are old regardless of their release dates, plus they're from people that lie and twist economic data as a chosen career.

Are you denying there is a slow and steady, yet concerted, move away from the global usage of the USD? Let's get down to brass tacks, shall we?

[Zippyjuan]

A weaker dollar would be helpful to the economy- it would discourage imports and encourage exports which would create more jobs over time.

[Natural Citizen]

A weaker dollar would be helpful to the economy- it would discourage imports and encourage exports which would create more jobs over time.

Export what, Zip? And to whom?

[Zippyjuan]

Export what, Zip? And to whom?

http://www.tradingeconomics.com/united-states/exports

United States is the world's third largest exporter. Main exports are: Industrial Supplies (34 percent of total exports) and Capital Goods (33 percent). Foods, feeds, and beverages account for 9 percent; Automotive vehicles, parts, and engines for another 9 percent and Consumer goods for 12 percent. Main exports partners are: Canada (19 percent of total exports), European Union (17 percent), Mexico (14 percent), China (7 percent) and Japan (5 percent).

Last month we exported $198 billion worth. Annualized that would be $2.3 trillion a year. Actual exports last year were $1.6 trillion or about nine percent of GDP. http://en.wikipedia.org/wiki/Economy..._United_States

[Natural Citizen]

http://www.tradingeconomics.com/united-states/exports



Last month we exported $198 billion worth. Annualized that would be $2.3 trillion a year. Actual exports last year were $1.6 trillion or about nine percent of GDP. http://en.wikipedia.org/wiki/Economy..._United_States

Zippy, this is all changing. You're going to have to try to better understand the current geo-political state of things. I mean, really.

Cripes exports to Russia alone just fell almost 40%. And that's a big deal once we get into what the BRICs are doing. And that's just one thing. Gosh. We could go on and on. But to do that, links to "data" just won't be practical or even functional given the state of things internationally. You're going to have to do so in a way that demonstrates some kind of working knowledge of the current geo-political happenings and do so in a way that would lead you to see into the future as to where we're heading. These links don't do that. They deceive. disinform...

[Zippyjuan]

Russia is not a major US trading partner. In 2013, they only accounted for $11 billion in US exports. https://www.census.gov/foreign-trade/balance/c4621.html

Out of $1.6 Trillion in total exports to all countries. The sanctions didn't hurt our overall exports in any significant way.

What about the BRICS?
Brazil- $44 billion in 2013. (and a surplus of $16 billion)
Russia- $11 billion (already noted)
India- $22 billion
China- (yes, we export to them too)- $121 billion in exports
South Africa- $7.3 billion

This is back in February (reporting on 2013 annual figures):
http://www.commerce.gov/news/press-r...-straight-year

U.S. Exports Reach $2.3 Trillion in 2013, Set New Record for Fourth Straight Year

U.S. Commerce Secretary Penny Pritzker today announced that U.S. exports in 2013 set a new record for a fourth straight year. International Trade in U.S. Goods and Services data released today by the U.S. Department of Commerce show that U.S. exports reached $2.3 trillion in 2013, up nearly $700 billion since 2009. The U.S. trade deficit improved $63.1 billion from the past year to $471.5 billion, the lowest since 2009. Merchandise exports to the 20 economies that have trade agreements with the United States reached a record $732.0 billion.

U.S. goods export sectors reached all-time highs across the board in 2013, including key industries such as automotive, industrial supplies, consumer goods, capital goods, and petroleum. Imports of goods decreased for the first time since 2009.

The trade surplus in services exports reached a record $231.6 billion, an increase of 12 percent from 2012. Annual service exports hit all-time highs led by the travel and tourism sector. In addition, in 2013, the services sector accounted for more than one half of the dollar growth in total U.S. exports compared to 2012.

“We’ve achieved a fourth-consecutive year of record-breaking export levels, demonstrating the strong momentum behind President Obama’s export agenda,” said Secretary Pritzker. “The fact is, we live in a globally-connected world in which 95 percent of America’s consumers live outside our borders. American companies clearly understand the value of selling their goods and services all over the world, which not only helps them expand, but also grows our economy and creates good jobs. Every $1 billion in additional exports supports approximately 5,000 U.S. jobs, and as such, trade and investment are critical to the strength of our economy. That is why we at the Department of Commerce are laser-focused on helping create more opportunities for businesses to export.”

More at link.

[devil21]

Dollar is expressly backed by American's labor. Less labor = less value to dollar. Bad economy = less labor. The bankers that own the dollar know our labor is steadily becoming worthless, most of it being their own doing, therefore so will the dollar become worthless. Time to change the paradigm and start the cycle all over again elsewhere but this time without a global currency tied to any particular nation's politics. That's the real game here.

[TheCount]

Are you denying there is a slow and steady, yet concerted, move away from the global usage of the USD? Let's get down to brass tacks, shall we?

That's a vast oversimplification.

1) Countries, like China, who had held nearly 100% of their currency reserves as dollars have realized that that is a mistake and so they are diversifying their assets. Moving from 100% dollars to 75% dollars does not mean that there are less dollars in the reserve if the reserves are rising.

2) China and other countries are continuing to buy treasuries, which require them to first purchase dollars in order to make those transactions.

3) Foreign direct investment in the American economy is increasing; those transactions also require dollars.

4) Currency markets are about both supply and demand. You can't look at just one side of the equation and make assumptions about what is going to happen.



About those other currencies, do you have a particular one you want to get 'down to brass tacks' about?

[Zippyjuan]

2) China and other countries are continuing to buy treasuries, which require them to first purchase dollars in order to make those transactions.

Actually in the case of China, they are buying dollar denominated things like US Treasuries so the don't have to convert the dollars we gave them for goods into Yuan. If they did that, it would cause the value of the yuan to rise and make their exports to us more expensive- reducing their trade (labor cost) advantage.

[devil21]

Oversimplified? No way. It's fools like you that try to over-complicate it to the point that people can't understand what's going on and give up trying to. That's your goal. It's why you bog down the discussion in minutae and irrelevant (at least to a layman) data and arguments and charts.

This planned goal (NWO plan, in short) of ending global USD reserve status is why there's a relative rush on right now to spend what value is left to the USD on propaganda based missions to militarily overthrow governments that won't voluntarily give up their resources to bankers in conjunction with a usury based global currency, since Islam prohibits usury, yet usury is the hallmark of western central bank controlled economies. This is the NWO plan in a nutshell and is easily understood if fools like you would stop trying to OVER COMPLICATE it, instead of simplifying it.

You still didn't answer my simple question though. It's a yes or no question.

Btw, from what I can tell, the BRICS nations are busy dumping their dollars into various hard assets, not holding them. The Russians bought Pabst Blue Ribbon beer for $#@! sake!

[Zippyjuan]

Btw, from what I can tell, the BRICS nations are busy dumping their dollars into various hard assets, not holding them.

Any links to support that claim?

Brazil: http://www.tradingeconomics.com/braz...hange-reserves



Granted this is total foreign exchange reserves and not just dollars but typically dollars account for about 70%.

In terms of US Treasuries (not the only way a country can hold foreign denominated reserves), they hold $20 billion than at the start of the year. http://www.treasury.gov/ticdata/Publish/mfh.txt

Brazil has actually been trying NOT to lose dollars they hold.

http://blogs.ft.com/beyond-brics/201...-to-the-world/

At about the same time as the country became a creditor, Brazil’s central bank began using a nifty new method of intervention on foreign exchange markets. Instead of buying and selling dollars on the spot market – the standard method of central bank intervention – it used currency swaps. This is a clever alternative because it achieves the same result as buying or selling dollars with no impact on the stock of reserves.

When the bank uses such a swap to limit the depreciation of the real, it offers to pay the difference between the initial exchange rate and the final exchange rate during the period of the contract, plus a dollar-linked rate of interest (known to traders as the cupom cambial). In return, it receives the cumulative interbank interest rate (currently about 10 per cent a year) on the amount of the contract in Brazilian reals. Crucially, the contracts are settled entirely in reals. No dollars exchange hands and there is no obvious impact on the country’s ability to pay its foreign debts.

The method works because it satisfies demand for foreign exchange contracts by financial market participants looking to hedge foreign exchange exposure or to speculate on movements in the exchange rate. By doing so, it removes demand from the market and has the same effect on the exchange rate as if that demand had been met by buying or selling dollars.

During several periods since the method was introduced, the central bank used it (in a mirror image of the contract described above) to limit the appreciation of the real, which was being driven up by the arrival of all that hard currency and undercutting the competitiveness of Brazilian exports.

[devil21]

I heart charts. Someone's labor created it. Hopefully an American but I doubt it.

It's also how I know you're not here to benefit average Americans. Over complicating economics, which Austrian economics has worked to simplify, is your goal so no one knows where they're going.