Author: jimmy67

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

Rank: 1

Post time 2007-1-15 13:33:56 |Display all floors

Wow

I just want to say, wow... a lot of Chinese on here have EXCELLENT English skills...;)

Good job, guys..



As for the standard RMB, I'm a Canadian, so I'm loving what's going on in the US right now...

I don't agree that the US is doing it on purpose, though... Their debt has been scary for a long time now... If the world standard ever became the Euro, or the RMB, the US would have to start thinking about the debt... as it is now, they don't care.

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Post time 2007-1-15 15:30:08 |Display all floors
It will be hard to replace the USD.  Remember the US uses Coercion diplomacy.  If you don't agree.... BAM... you're dead.  I mean look at Saddam.  He wanted to change oil from being bought in USD to Euros and look what the US did to him!
"When I am White, I win because I'm White.  When I'm Black, I win because I am Bogoljubow."

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Post time 2007-1-15 19:44:28 |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.
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very true,we need more people like you,clear-headed.

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Post time 2007-1-16 00:26:36 |Display all floors

Jimmy

Looks like a good time to stop all that meaningless trade with the U.S.

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Post time 2007-1-16 10:24:09 |Display all floors

Please forgive me, spirit-race

In this  thread which I launched, I copied a comment from somebody else who wrote to a story about China's RMB on CD online.    I don't believe that U.S. is running red at all.  It is economically very healthy, I would say.

Stop trading with the U.S. is bizarre thought, because it will certainly harm both China and U.S. consumers.  And, the Federal Reserve would have raised the rates by a legion, if not for the inexpensive Chinese goods.

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Post time 2007-1-16 11:30:52 |Display all floors

China's commerce ministry said, usuasually, yuan undervalued

BEIJING, Jan 16, 2007 (Reuters)  ---- The yuan is undervalued and further appreciation is needed to balance the economy, the think-tank of China's Ministry of Commerce said on Tuesday.

The explicit acknowledgement is striking from a ministry that has long worried about the impact of a stronger yuan on export-oriented jobs.

"An undervalued yuan is just one reason for the imbalance of the domestic and external economy," according to the report by the Chinese Academy of International Trade and Economic Cooperation published on the ministry's Web site, www.mofcom.gov.cn.

It said China had to change the pattern of its trade and its model of economic growth, and yuan appreciation had an important part to play in that process.

According to the report, an appropriate rise in the yuan would do a lot of good for China: it would help to slow growth in China's trade surplus, which rose 74 percent in 2006 to a record $177.47 billion; it would also spur domestic industry to upgrade, ease tensions with trade partners and stimulate domestic demand.

But the report said it was up to China to decide the rate of the yuan's climb. The think-tank argued for caution.  

"There should be a slow and gradual approach to exchange rate adjustment because that is what entails the smallest risks and would be most efficient," the report said.

It cited the example of Japan to illustrate how a spike in the exchange rate could hurt an economy.

Under pressure from the United States, Japan let the yen rise sharply, leading to a serious asset price bubble that burst with damaging economic consequences.

"That should be a lesson for China," the ministry said.

In the first part of the report, published on Monday, the think-tank said the current pace of yuan rise was appropriate and had little impact on China's trade.

It also forecast that the yuan will have gained 9-10 percent by end of 2007. Since it was revalued by 2.1 percent in July 2005, the currency has climbed a further 4.13 percent.

Monday's section of the report said it was difficult to pin down by how much the yuan was undervalued, with estimates by economists ranging from 5 percent to 30 percent.

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Post time 2007-1-16 13:41:57 |Display all floors
In fact, I wanna know whether the recent increase in the level of consumer price is the result of RMB appreciation. In my opinion, the more countries reserve RMB, the more RMB is produced. Then maybe this lead to a little inflation, and the RMB is appreciation.

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