Ignore the hype about the death of the dollar and currency whales. The PetroYuan is a US success story.
Bloomberg reports As Trade War Heats Up, Biggest Currency Whales Make Their Move.
“A lot of countries around the world are turning to Europe for increased partnership in trade,’’ said Jens Nordvig, who was Wall Street’s top-ranked currency strategist for five years running before setting up Exante Data a little over a year ago. “It’s not crazy to think that’s also going to be happening in the area of capital markets and reserve allocations. The bottom line is, this trade stance the U.S. has now is not helpful in terms of making the dollar attractive” for central banks that hold billions in reserves.
Nordvig estimates a half-trillion dollars could flow into the euro in the next two years, equal to a 25 percent boost in the currency’s share of reserves.
Developing countries and oil-exporting nations in the Middle East, which rely heavily on international trade, are the most likely to lift their euro allocations, he said. Six emerging economies — China, Saudi Arabia, Taiwan, India, South Korea and Brazil — hold almost half the world’s reserves, data compiled by Bloomberg show. China alone has amassed over $3 trillion in foreign exchange — primarily as a result of its cheap exports to the U.S.
Trade Whale “Buying Opportunity” Silliness
It does not matter whether countries like the dollar or like euros. Reserves are a mostly a function of trade math.
As the US deficit increases, and it will, foreign countries will accumulate more US assets.
It’s a mathematical necessity that has nothing to do with likability.
From time to time, countries like China may sell treasuries or other US dollar denominated assets to stop capital flight.
Death of the Dollar?
Death of US dollar? China launches petro-yuan to challenge greenback’s dominance says RT.
