Re: Chinese to dump their dollars


"Ignoramus11967" <ignoramus11967@xxxxxxxxxxxxxxxxxxxx> wrote in message
news:_7idnZsLgfit9KPanZ2dnUVZ_gmdnZ2d@xxxxxxxxxxxxxxx
On 2007-11-17, azotic <azotic@xxxxxxx> wrote:
Interesting, will america also dump the dollar ?

http://www.reuters.com/article/ousiv/idUSPEK16889720071116


Some in America already partially diversify into other currency (your
humble servant since 2003). The Chinese TV's advice is a few years
late.

But the advice for Chinese investors is based on an entirely different
dynamic. Their basic problem is that the control regime of the Yuan is
coming to an end, and simultaneously, against their trade interests as well
as their investment interests, the US dollar is dropping in value.

If they could still control the Yuan as they did in the past their response
would be to buy *more* US dollars, not fewer. That's what all the
export-driven Asian central banks have done for the past 30 years, whenever
the dollar started to fall. But the game is up; currency control regimes are
getting harder to sustain; and the US shows little interest in doing
anything on its own to prop up the dollar. If the Chinese government or
Chinese citizens tried to buy dollars in order to sustain their currency
advantage for trade, they'd just wind up holding the bag.

It's not an altogether bad thing for the US either way.

--
Ed Huntress


.

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