Sunday, February 27, 2011

Dollar hegemony takes another knock

A piece I did during my tenure as Chief Editor of Newsnet Scotland. I will soon resume publishing with the title Scottish Times.

by Alex Porter, Economy Editor

The Bank of India (BoI) is the first Indian bank to offer trade settlements between the rupee and the Chinese yuan (RMB) from Hong Kong. Hong Kong is the only offshore market for Chinese currency with $400 billion yuan being traded against other currencies in the past year. The news is the latest in a string of efforts by China to have the RMB accepted as an international currency and follows a campaign of persuasion by the China Banking Regulatory Commission.

Currently Indian buyers make payments in US dollars and so often have to convert their rupees into US dollars to effect transactions. This new facility being offered by the BoI lessens the need for Indian importers to keep the same volume of US dollar in reserve and use as an intermediary.

With world markets being flooded with dollars the rupee is considered by Chinese exporters as being more stable. That aside, if Indian importers want to procure low-cost goods then Chinese exporters have some leverage to have settlement in rupees.

The US will not be overjoyed by this development as having the dollar as a reserve currency means the dollar's value is supported by the need for foreign companies to have reserves to make international transactions. This structural demand helps offset the glut of supply and so prevents the value of the dollar falling more than it has in recent years.

Real-time financial settlements are now supported with the Bank of India having a RMB account with Bank of China with transactions extending to buyers and sellers in all of China's provinces.

Towards the end of last year Russia and China began trading directly in each other's currencies. Russia's currency, the ruble, is fully convertable in international exchanges. Although international investors believe that it would be in China's best interests to float the RMB, Beijing is cautious.

One key strength of the US dollar is that there is no obvious candidate for replacing it as the world's reserve currency. Until recently the markets were convinced that the euro would become an obvious candidate to become a rival however soveriegn debt problems across in Greece, Spain, Portugal and Italy have undermined confidence in the euro's future.

Many analysts believe that the Chinese would like to position the RMB as a successor reserve currency. Holding a large amount of US debt, the Chinese have been frustrated to see the value of their dollar investments become depreciated through quantative easing by the Federal Reserve.
scotland news

15 comments:

Anonymous said...

I think the admin of this web page is actually working hard for his
web site, since here every material is quality based data.


Here is my homepage :: 1.6 aimbot

Anonymous said...

This piece of writing gives clear idea for the new
visitors of blogging, that really how to do running a blog.


Have a look at my blog post: free youtube commenter tool

Anonymous said...

Very soon this web page will be famous amid all blogging and site-building visitors, due to it's pleasant posts

Here is my weblog ... free sex games

Anonymous said...

I've been exploring for a little for any high-quality articles or weblog posts on this sort of space . Exploring in Yahoo I finally stumbled upon this web site. Studying this info So i am satisfied to show that I've a very excellent uncanny feeling I discovered exactly what I
needed. I so much indisputably will make certain to don?
t omit this website and provides it a glance on a
relentless basis.

My page earn with surveys

Anonymous said...

Hi there, I read your blogs daily. Your humoristic style is witty, keep
it up!

Review my web page Hacking Software

Anonymous said...

Howdy, There's no doubt that your website could possibly be having internet browser compatibility issues. Whenever I look at your site in Safari, it looks fine however, if opening in IE, it has some overlapping issues. I merely wanted to give you a quick heads up! Apart from that, great site!

Here is my site adf.ly

Anonymous said...

Truly when someone doesn't know after that its up to other visitors that they will assist, so here it takes place.

Feel free to visit my weblog ... adfly

Anonymous said...

Woah! I'm really loving the template/theme of this site. It's simple, yet
effective. A lot of times it's challenging to get that "perfect balance" between user friendliness and visual appeal. I must say you've done a awesome job with this.
In addition, the blog loads super quick for me on Internet explorer.
Excellent Blog!

Stop by my blog post: Twitter Password

Anonymous said...

I visit daily some web sites and sites to read posts,
but this blog gives quality based posts.

Feel free to surf to my web blog: youtube bot

Anonymous said...

whoah this blog is wonderful i like reading your posts. Stay
up the good work! You already know, many individuals are searching around for this info, you can aid them greatly.


Also visit my weblog ... hack a twitter account

Anonymous said...

bookmarked!!, I love your website!

Also visit my page; Make Money With PTC Sites

Anonymous said...

This is my first time visit at here and i am in fact pleassant to read all at
one place.

Feel free to visit my blog post - youtube Hits

Anonymous said...

I like the valuable info you provide in your articles.
I'll bookmark your blog and check again here regularly. I'm quite certain I will learn lots of new stuff right here!

Best of luck for the next!

My site; Free TV Series

Anonymous said...

If you want a Premium Minecraft Account check out this
generator. With it you can generate a unique Minecraft
Premium Account which no one else has! You can Download the
Free Premium Minecraft Account Generator http://www.

get-minecraft-free.tk

For hottest news you have to visit world wide
web and on web I found this web page as a most excellent web site for newest updates.


Here is my weblog ... minecraft download

Shafira Aulia said...

"Thank you for nice information
Please visit our website unimuda and uhamka"