Decline of the dollar: How long term and whassit mean?

[david dissadent]

Interesting.

China appears to be moving away from accepting dollars except for US contracts, i.e. the dollar is no longer the worlds currency.

http://www.nakedcapitalism.com/2008/03/chinese-avoiding-dollar-as-invoicing.html

"They are moving to euros, pounds, Australian dollars or even quoting prices in renminbi," David Wei, chief executive, told the Financial Times. Moreover, he added, prices quoted in dollars were now often valid for just seven days compared with the 30-60 days common previously.

This will mean that dollars are not being bought to be used to trade with China. This will really hurt the dollars value. More strain on the creeking global economy and more evidence Bretton Woods II is dying.

 

[zoltan]

Hmm maybe

but the chinese are more than aware of allying themselves too much with any currency - the RMB is pegged to a notional basket of global and regional currencies ( apparently) rather than the USD nowadays - it makes much more sense to create a wide base of overseas reserves to lessen the impact of probelms like the recent run on the USD.

the JPY/SGB/AUD/EYR/GBP etc are as stable as you are going to get outside the USD these days

Active and open RM of currency reserves is the nature of the game these days for central banks , no longer do they sit on a vault of gold and hope for the best