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South Africa Will This Week Take Some Initial Steps To Dump The Us Dollar As The Preferred Worldwide Currency.


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#1 Asheron

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Posted 25 March 2012 - 10:06 PM

South Africa this week will take some initial steps to unseat the US dollar as the preferred worldwide currency for trade and investment in emerging economies.

Thus the nation is expected to become party to endorsing the Chinese currency, the renminbi, as the currency of trade in emerging markets.

This means getting a renminbi-denominated bank account, in addition to a dollar account, could be an advantage for African businesses that seek to do business in the emerging markets.

The move is set to challenge the supremacy of the US dollar. This, experts say, is the latest salvo in the greatest worldwide currency war since the 1930s.

In the '30s, several nations competitively devalued their currencies to give their domestic economies an advantage over others.
And this led to a worldwide decline in overall trade volumes at the time.

The north will be pitted against the entire south in a historic competitive currency battle -- whose terrain has moved to the Indian capital, New Dehli -- where the Brics (Brazil, Russia, India, China, and South Africa) nations will assemble next week.

China seeks to find new markets for its currency and to lobby to internationalise it throughout the Brics states.

For China this is not a new game. In 2009 senior Chinese banking officials issued a statement that the international monetary system was flawed owing to an unhealthy dependence on the US dollar, and they called for a "super-sovereign" international reserve currency.

Experts say Beijing's first step is to internationalise its currency (by expanding its reach beyond China), liberalise it (to allow its value to be determined by the market instead of actively managing it as they currently do), and then make it a reserve currency for many nations in the developing world.

Africa's largest bank, Standard Bank, says in a research document: "We expect at least $100 billion (about 768 billion rand) in Sino-African trade -- more than the total bilateral trade between China and Africa in 2010 -- to be settled in the renminbi by 2015."

The bank anticipates that the use of the renminbi will lower transaction costs in Africa, thus lowering the barriers to doing business.

It also says that the Chinese will be more successful in transacting in renminbi in Africa than anywhere else because most currencies are weak and somewhat localised.

Not only will the US dollar be challenged, but also the entire international financial regime -- led by the World Bank and the International Monetary Fund -- which has been dominant since the end of World War II.

South Africa's place in the emerging international financial regime is set to be enhanced.

Zou Lixing, vice-president of the Institute of Research of the China Development Bank, told the Brics preparatory meeting recently that "although the economic aggregate of South Africa is small relative to the Brics, South Africa provides a gate for the Brics to get access to the huge African market."

The five-member nations have collectively called for an end to the tacit agreement between the US and Europe that ensures that the head of the World Bank is an American citizen and the International Monetary Fund head is European.

They have proposed that an emerging-market candidate be fielded when the term of the current World Bank head, Robert Zoellick, expires in three months.

Fundacao Vargas, a member of the Brazilian delegation, said Brics could confront "existing governance structures" and seek to strengthen the blocs' influence in established institutions like the World Bank and the International Monetary Fund, while creating alternatives.

The demand for greater political say in international affairs dovetails with China's expected rise as a financial superpower in the next eight years.

Vargas showed the preparatory meeting projections indicating that China's economy will have eclipsed that of the US by 2020, hence the promotion of the renminbi as the preferred currency of the south.

The renminbi has traditionally traded at a deliberately lower exchange rate, which gave a huge boost to China's domestic economic sectors and enabled its booming industrialisation and growth.

The US and other trading partners have long accused China of being a "currency manipulator."

Last week Brazil declared its commitment to keep its own currency -- the real -- low. Its finance minister, Guido Mantega, reiterated his November 2010 declaration that a global currency war has broken out.

He said: "We do not want to lose our manufacturing sector. We will not sit back and watch while other countries devalue their currencies."

Brazil and China cried foul last year when, through a slew of initiatives dubbed QE2 -- Quantitative Easing 2 -- the US indirectly devalued its currency by pumping about $600 billion into its economy to protect the economy from sliding back into recession.

South African economists were in two minds about the moves to extend the influence of the renminbi.

Economist and academic Peter Draper told City Press recently that the decision to establish a Brics development bank and to enlarge the renminbi's sphere "is political and related to the current political dynamics within the World Bank" and the established international financial system.

Tom Wheeler of the South African Institute of International Affairs said developments in India were "giving substance to the previously and loosely arranged economic bloc."

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#2 soldintime

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Posted 26 March 2012 - 03:54 PM

Compelling long term case for USD:

* US is deleveraging. Total USD debt (Household, government & business) is going down and is now lower than that of Germany.
* US is becoming an energy powerhouse. Shale gas and deep see drilling will make the US an exporter of energy. This will lead to a trade surplus.
* US has good demographics. Growing population and no stigma's attached to immigration will mean US does not face problems with age related costs as other countries or regions have.

Yes US has huge debt. Similar to Europe & Japan but it has the 3 things above which make it better placed.

#3 soldintime

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Posted 26 March 2012 - 03:55 PM

South Africa this week will take some initial steps to unseat the US dollar as the preferred worldwide currency for trade and investment in emerging economies.

Thus the nation is expected to become party to endorsing the Chinese currency, the renminbi, as the currency of trade in emerging markets.

This means getting a renminbi-denominated bank account, in addition to a dollar account, could be an advantage for African businesses that seek to do business in the emerging markets.

The move is set to challenge the supremacy of the US dollar. This, experts say, is the latest salvo in the greatest worldwide currency war since the 1930s.

In the '30s, several nations competitively devalued their currencies to give their domestic economies an advantage over others.
And this led to a worldwide decline in overall trade volumes at the time.

The north will be pitted against the entire south in a historic competitive currency battle -- whose terrain has moved to the Indian capital, New Dehli -- where the Brics (Brazil, Russia, India, China, and South Africa) nations will assemble next week.

China seeks to find new markets for its currency and to lobby to internationalise it throughout the Brics states.

For China this is not a new game. In 2009 senior Chinese banking officials issued a statement that the international monetary system was flawed owing to an unhealthy dependence on the US dollar, and they called for a "super-sovereign" international reserve currency.

Experts say Beijing's first step is to internationalise its currency (by expanding its reach beyond China), liberalise it (to allow its value to be determined by the market instead of actively managing it as they currently do), and then make it a reserve currency for many nations in the developing world.

Africa's largest bank, Standard Bank, says in a research document: "We expect at least $100 billion (about 768 billion rand) in Sino-African trade -- more than the total bilateral trade between China and Africa in 2010 -- to be settled in the renminbi by 2015."

The bank anticipates that the use of the renminbi will lower transaction costs in Africa, thus lowering the barriers to doing business.

It also says that the Chinese will be more successful in transacting in renminbi in Africa than anywhere else because most currencies are weak and somewhat localised.

Not only will the US dollar be challenged, but also the entire international financial regime -- led by the World Bank and the International Monetary Fund -- which has been dominant since the end of World War II.

South Africa's place in the emerging international financial regime is set to be enhanced.

Zou Lixing, vice-president of the Institute of Research of the China Development Bank, told the Brics preparatory meeting recently that "although the economic aggregate of South Africa is small relative to the Brics, South Africa provides a gate for the Brics to get access to the huge African market."

The five-member nations have collectively called for an end to the tacit agreement between the US and Europe that ensures that the head of the World Bank is an American citizen and the International Monetary Fund head is European.

They have proposed that an emerging-market candidate be fielded when the term of the current World Bank head, Robert Zoellick, expires in three months.

Fundacao Vargas, a member of the Brazilian delegation, said Brics could confront "existing governance structures" and seek to strengthen the blocs' influence in established institutions like the World Bank and the International Monetary Fund, while creating alternatives.

The demand for greater political say in international affairs dovetails with China's expected rise as a financial superpower in the next eight years.

Vargas showed the preparatory meeting projections indicating that China's economy will have eclipsed that of the US by 2020, hence the promotion of the renminbi as the preferred currency of the south.

The renminbi has traditionally traded at a deliberately lower exchange rate, which gave a huge boost to China's domestic economic sectors and enabled its booming industrialisation and growth.

The US and other trading partners have long accused China of being a "currency manipulator."

Last week Brazil declared its commitment to keep its own currency -- the real -- low. Its finance minister, Guido Mantega, reiterated his November 2010 declaration that a global currency war has broken out.

He said: "We do not want to lose our manufacturing sector. We will not sit back and watch while other countries devalue their currencies."

Brazil and China cried foul last year when, through a slew of initiatives dubbed QE2 -- Quantitative Easing 2 -- the US indirectly devalued its currency by pumping about $600 billion into its economy to protect the economy from sliding back into recession.

South African economists were in two minds about the moves to extend the influence of the renminbi.

Economist and academic Peter Draper told City Press recently that the decision to establish a Brics development bank and to enlarge the renminbi's sphere "is political and related to the current political dynamics within the World Bank" and the established international financial system.

Tom Wheeler of the South African Institute of International Affairs said developments in India were "giving substance to the previously and loosely arranged economic bloc."

http://www.citypress...rrency-20120324



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#4 SuperChimp

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Posted 26 March 2012 - 04:17 PM

Compelling long term case for USD:

* US is deleveraging. Total USD debt (Household, government & business) is going down and is now lower than that of Germany.


The debt has to increase every year to satisfy the interest payments for past debt. The debt can be paid off in a debt-based money system only by the destruction of the currency itself. Just look at the problems countries are having balancing their budget deficit. Do you remember the problems Obama's government had passing the budget only a couple of months ago?

*Growing population and no stigma's attached to immigration


Are you serious? Do you know how difficult it is to gain a visa and work in America? Just look at the wall the American government is building between them and Mexcio.

You are correct that long term America is better placed than many other nations to survive any economic crisis but only when they abandon their current financial system.




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