4/23/2012 7:58 PM ET
By Jim Jubak
Is the yuan the new dollar?
As China's currency becomes easier and easier to trade, and as its economy grows, it is becoming an alternative to the greenback. Here's how investors can play the trend.
.
.
.
Well, I think it's time to at least take one "very" off the timeline. China is moving more quickly than expected to turn its currency into a true global alternative.
How far can it go?
It remains to be seen if the Beijing government can bring itself to give up the kind of control over its currency that would be necessary to turn the renminbi into a real alternative to the dollar. China's economic policies are so grounded in the government's ability to control the exchange rate, and the flow of its currency in and out of the country, that the renminbi may never gain the currency market share that China's economy and reserves could otherwise command. But the global financial crisis -- and the damage suffered by the euro, which had looked like a true alternative to the dollar before the European debt crisis -- has pushed Beijing into action faster than projected even just a year or two ago.
.
.
.
The real big bang, though, is scheduled for 2014, according to the People's Bank. That's when China will roll out a system that would allow countries to settle payments for Chinese goods in yuan instead of dollars. With higher volumes will come lower costs -- in the current system it costs more to do cross-border transfers in yuan than in dollars. That cost differential isn't likely to persist for long, given the volume of its China's global trade. International trade settled in yuan was just $371 billion in 2011.
Full article: http://money.msn.com/investing/is-the-yuan-the-new-dollar-jubak.aspx
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
| 