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Are Asian central banks using RMB as reserves now? [Copy link] 中文

Rank: 4

Post time 2007-1-12 09:00:56 |Display all floors
Somebody said:   The Russian Reuble is on the rise. China's Yuan (RMB) is on the rise. The U.S. Dollar is on the Down-ward slide, and it will continue to slide until a gabage-bag full will only exchange you for a bag of bread.

The U.S. debt is already  3 Trillion U.S. dollars; they will never repay that Debt; practically, the U.S. is now bankrupt !

Many Asian Central Banks are using RMB as reserves.

Why the bloody-hell Hong Kong Dollar is still pegged to the U.S. Dollar ?   


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hanlei has been deleted
Post time 2007-1-12 09:18:23 |Display all floors

thanks, I agree to the rising value and buying power of RMB

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basket has been deleted
Post time 2007-1-12 09:28:02 |Display all floors

US dollar keeps depreciating

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Rank: 4

Post time 2007-1-12 10:03:51 |Display all floors

HK will not choose to drop USD peg until RMB becomes fully convertible.

Besides, USD's depreciation just relatives to some certain currencies, considering US's ecnomic power, USD is still the stablest currency and the best choice as foreign reserves.

[ Last edited by catbird at 2007-1-12 10:19 AM ]

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Post time 2007-1-12 12:56:03 |Display all floors
A couple of points of interest:

- RMB overtook HKD for the first time in 13 years. Last time I checked it was 1:0.997. (Though HKD is still slightly more expensive in practical exchange because of processing chrages.)
- RMB is at an all time high against USD, 1:7.8 - first time ever.

Yes, RMB is appreciating while USD is taking the other road. Yes, RMB is quite likely to become a hard currency in a few years' time. But despite all this, like catbird said, the US is quite economically stable, and still the world's largest economic power, and will probably be staying there for many more years to come. It's going to take a while for the country to become bankrupt, if ever.
*breathe*

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Post time 2007-1-12 13:46:09 |Display all floors

at present and seems in the foreseeable future

that foreign governments taking in RMB as their reserves will prove to be a feasible & wise decision,  because as its value keeps rising,  your storage of it will gain you more.   And, personally I assume more storage of RMB, once become convertible, could help a government stablize its financial market.

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Post time 2007-1-12 14:18:47 |Display all floors

Completely wrong

"Many Asian Central Banks are using RMB as reserves"
Where does this information come from? RMB is not fully convertible. It is still too dangerous to use RMB as a forex reserve storage vehicle. What does "inconvertible" mean? It means today you buy a house at 1 million yuan. It's possible that tomorrow you can't buy a coke with the same amount, depending on the monetary policy the central bank takes out. What does "fully convertible" mean? It means that a single contry can't manipulate its own currency by itself. Who dare to use RMB as forex researve now? In the future, only after when it is fully convertible, maybe there are some countries.

"practically, the U.S. is now bankrupt !"
No! Countries using foreign currencies as reserves are not looking at the foreign country's actual balance sheet. They are using the expectation over the country's solvency and future earnings. It is naive to draw this conclusion. As long as people believe that the US is ABLE to pay the debt, they will keep on lending to the US (by buying US T-bonds etc) and holding US dollars as reserves. It is an indeed rational act.

In addition, the prices of RMB (the exchange rate of yuan against other currencies) does not mean how weathly China is. It only reflects the supply and demand relation of the currency. Each unit of Japnese yen or Korean won is worthless compared with yuan, but you can't say Japan and Korean's economies are worse than the Chinese one.

Also, I'd like to remind the too "optimistic" ones that it is GDP PER CAPITA rather than aggregate GDP that reflects the national economic strength. Altough our great nation now ranks No 4 in the world in absolute GDP figures, there is still a long way to go before we truely become an "advanced" economy. By reminding ourselves this, we could keep in mind the gap and take out more efforts for the country and ourselves.

So why "the bloody hell" shoudl HK untie pegging to the US dollar and divert to RMB, at present at least?

[ Last edited by zinc06 at 2007-1-12 03:13 PM ]

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