EURUSD 1.1851 |
USDJPY 111.52 |
GBPUSD 1.3772 |
AUDUSD 0.7485 |
USDCAD 1.2406 |
GBPJPY 153.59 |
EURJPY 132.15 |
AUDJPY 83.48 |
CADJPY 89.86 |
Silver 26.23 |
China's Currency Trick خدعة عُملة اليوان
China's priority to make the yuan a lending currency instead of a reserve or invoicing currency. Here is what/why it means.
Latest Charts EURGBP & Gold مخططات
Here are the latest levels in EURGBP & GOLD discussed earlier with the WhatsApp Bdcst Group.
View Hot-Chart..
Does that ring a bell for you ?
No ? Remember that summer with euro at 1.60$ and crude oil at 144$ a barrel ?
It was summer 2008, right before the end of Olympic games and before the beginning of black September, black October, and black November !
Yep ! Nothing will happen during the worlcup.
The world is round for now, let it become square again in august and September.
This market makes me sick. How high is it gonna go ? While Trichet is quietly saying that they are buying state-corrupt-bankrupt bonds, eurusd is going up ??
What kind of market is it ?? And why the Chines let that happen ? Are they buying euro in hope this sh.. is going to recover ? What a joke ! Meanwhile, french and italian unions are cooking up monsters strikes by september. The name of the game is "lie"... how long is this going to last ?
200 pips away from Ashraf's target
CNBC
Chinese exporters who made a big push only a year ago to bill in euros are increasingly turning their backs on the wounded European currency and demanding dollars instead.
By contrast, Beijing last week said a report it was reviewing the euro portion in its mountain of foreign exchange reserves was groundless and it calmed markets by saying that Europe remained a key investment market.
But Chinese exporters and the local governments that oversee them are less confident. They are trying to keep a wider berth from the euro, at least for now.
Hangzhou Natutex Apparel, a producer of special fabric for outdoor use, ships nearly all of its 10 million yuan ($1.5 million) in annual exports to Europe.
Last year, when the European economy looked to be on solid footing, it settled 50 percent of sales in the euro.
It has cut that back to just 5 percent this year.
"The reason is obvious. You have to be alert about exchange rates in the foreign trade business," Yu Yueping, Natutex chairman, said. "It would be too bad if your hard-earned profits were eroded by exchange rate changes."
The euro has tumbled 17 percent against the yuan in 2010 as the Chinese currency has been locked in place against a strengthening dollar.
Short-Term Contracts
Local governments are also telling exporters to be cautious about settling trade in the European currency.
Trade officials in Jiangsu, a prosperous manufacturing province, told exporters to sign short-term contracts when dealing with European clients and to cut back on euro-based settlements, the Jiangsu Business News reported.
"Considering the euro's uncertain future, exports to European countries should be settled in yuan if possible. If the buyers do not agree on yuan settlement, then use the dollar," it said.
More than 80 percent of total Chinese exports are paid for in dollars, according to local reports.
The government had been trying to change that, to encourage more euro settlement as part of a broader effort to diversify its foreign exchange reserves. It had seemed a smart - and easy - path to diversification.
Not only do euro bond markets offer the only real rival to the depth and liquidity of U.S. debt markets, but the European Union is China's biggest export destination, meaning lots of cash flows from Europe to China every year. Times have changed.
Shishi Daily, official newspaper of an export base in coastal Fujian province, reported cheerfully last week that its exporters were doing well after heeding warnings to shun the euro.
"Exporters in Shishi were told by officials via our newspaper: Don't use the euro, use yuan or the dollar! Many exporters accepted this suggestion, so even as the euro has kept falling, exporters in Shishi have not reported heavy losses," it said.
How to Make a Sausage
Peng Hu's sausage empire in northwestern China has been less successful.
His firm, Xinjiang Huarui Casing Products, every year exports about 50 million yuan worth of the material that encases sausage fillings to Europe, especially Germany and Austria.
With all his customers paying euros, he has suffered steep losses.
"I have tried hard to ask my clients to settle trade in other currencies, in dollars or yuan or whatever, just not euro," Peng said. "They have yet to agree, but I will keep trying."
About 4,000 kms (2,485 miles) away in his textile factory, Yu reflected on the vagaries of the foreign exchange market. The dollar would probably not remain his currency of choice forever.
"Life has to move on and the euro may go up again a couple of years from now," Yu said.
CNBC.com
Austerity measures imposed by the euro zone will likely push the euro back towards $1.50 or even $1.60 but the European currency is unlikely to achieve the status of reserve currency, economist Warren Mosler, founder and principal of broker/dealer AVM, told CNBC.com Friday.
The euro has fallen sharply versus the dollar since the euro zone's sovereign debt worries began, with many analysts predicting it will slide to parity with the greenback or even below.
But Mosler thinks the recent plunge has been caused by portfolio adjustments investors shifting assets from euros to gold or dollars and that this trend is nearly over.
Rising taxes and spending cuts, pledged by governments in the single European currency area to cut debt, are "like a crop failure" because they will decrease the amount of euros available, he said.
"Everything they do in the euro zone is highly deflationary," Mosler told CNBC.com in a telephone interview.
"I think there's a very good chance the euro would be stronger because of the austerity measures; this can very easily get it back to $1.50-$1.60," he added.
The euro is unlikely to become a global reserve currency because the EU's economic policy is geared towards growth based on exports and the euro zone is running a surplus, he explained.
"The only way the rest of the world will hold your currency is if you run a trade deficit," he said. "Economics is the opposite of religion, it's better to receive than to give."
The ECB Could End the Debt Crisis
The European Central Bank could easily appease the fears of default which have plagued markets regarding by creating money and giving it to its members, Mosler said.
The ECB, "if it wants to credit any nation, it can," he added. "The ECB could make a distribution of, say, 10 percent of GDP to each member. The ECB can just credit the accounts of the member nations based on how many people they have. That would reduce all debt ratios this year by 10 percent."
The measure would not contradict EU anti-bailout rules, since the money would be distributed equally among members and if the cash is used to cover the deficit would not be inflationary, Mosler added.
"My proposal is to put the ECB in a position where governments become dependent of checks from the ECB," he said. "Operationally, it's very simple to do, you just credit their accounts. The Finance Ministers would direct the money."
The central bank could make this an annual distribution, and attach financial discipline conditions to it, such as respecting the EU's Stability and Growth Pact.
The country that does not respect the pact does not get the money, making it a more powerful enforcement mechanism and helping fight speculators at the same time, he explained.
"France and Holland may stick with Germans "
No. No way. France is a club Med country as well. One cannot compare France to Germany. French and German are too different.
Our famous poet Jean De Lafontaine (1621-1695) wrote :
The Cicada, having sung
All summer long,
Found herself wanting
When the north wind came.
Not a single morsel
Of fly or tiny worm.
She went begging for food
To her neighbour the Ant,
Asking her to lend her
Just a few grains to get by
Until the next season.
I will pay you back, she said,
Before August, animal's honor,
Interest and principal
The Ant is no lender
This is the least of her faults.
What were you doing during the warm days?
She said to this borrower.
Night and day no matter what
I was singing, like it or not.
You were singing? I'm very glad
Very well, start dancing now.