Uh oh.

[Swede]

WILL CHINA LEAD A STAMPEDE OUT OF THE US DOLLAR?

The big-3 central banks utilized their three major weapons, (1) relentless jawboning, (2) Japanese threats of intervention, and (3) coordinated rate hikes, telegraphed far in advance to avoid any nasty surprises in the markets. But the big-3’s spell-binding magic act began to wind down on November 25th, when Chinese deputy central banker Wu Xialong jolted the foreign currency markets, warning other Asian central bankers of the future risk of a US dollar devaluation.

Beijing is having second thoughts about the composition of its $1 trillion portfolio of FX reserves, with 70% held in low yielding US fixed income securities. “Firstly, long-term US interest rates are falling. Secondly, the exchange rate of the US dollar, which is the major reserve currency, is going lower, increasing the depreciation risk for east Asian reserve assets,” Wu said.

On October 10th, Fan Gang, another member of People’s Bank of China’s policy committee, made similar comments, “China risks an erosion of its holdings because the US dollar will probably decline.” On August 29th, Gang wrote, “The US dollar is no longer a stable anchor in the global financial system, nor is it likely to become one, therefore it is time to look for alternatives.”




http://www.financialsense.com/fsu/editorials/dorsch/2006/1129.html

[roamer65]

1. Last one out is a rotten egg.

I think us in the US are going to see German style hyperinflation very soon. I'll start to use Canadian dollars if we do, since I live so close to Canada.

[Art_from_Ark]

2. Well, the bu$hies seem to be getting their wish

of an independent yuan.

[roamer65]

3. Rumor also has that the Chinese are going...

for gold-yuan convertibility. That will make the yuan the reserve currency if they do.

[BlueStorm]

4. What is this about the US dollar declining

and why are Japan and China pulling out of it?

I don't understand a damn thing about economics!!

Blue