China, Russia renounce the dollar?

[D-Mack]

MOSCOW. (Anatoly Gorev for RIA Novosti) - The recent meeting between Russian Prime Minister Vladimir Putin and his Chinese counterpart, Wen Jiabao, created a financial sensation. Wen said that the two nations could withstand the global financial crisis if they joined forces; Putin urged him to go farther and stop using U.S. dollars in Russian-Chinese settlements.

This idea is nothing new. Russia and China reached a "framework" agreement in November 2007, which was followed by China's similar agreement with Belarus.

Earlier this year, Iranian President Mahmoud Ahmadinejad and Venezuelan leader Hugo Chavez turned against the dollar as well when they asked their OPEC partners to stop using the dollar for oil settlements. They argued that the "green" currency was no longer reliable and it was high time they look for a more stable and predictable alternative.

Curiously, unlike the Ahmadinejad and Chavez appeal, Putin's proposal came as the dollar was on the rebound and even began pushing the euro. Economists even started talking in terms of a reversal of the global currency trends, rather than the temporary appreciation of the dollar.

Analysts predict that the dollar will regain its value in the next few months. They do not see anything which could hinder its steady growth.


....

http://en.rian.ru/analysis/20081030/118047851.html

After reading a bit of Hudson's book, I wonder if they ever get their act together.

[Supercilious]

Re: China, Russia renounce the dollar?

Nope, by the contrary. All this rhetoric shows only that China and Russia are both in a serious financial squeeze and starving for dollars. This is nothing else than a repeat of the famous Brazil-Argentina "dumping the dollar" show.

OK it's clear that Russia is loosing reserves fast, but why China is starving for dollars? :eek:

That is the truly interesting question.;)

[touchring]

Re: China, Russia renounce the dollar?

I got some receivables in dollars until Feb, i hope the dollar can hold up until ten. lol

[Southernguy]

Re: China, Russia renounce the dollar?

DECLARATION:;)
We, citizens of the world are fed up with financing for free, trough the use of the dollar in our international transactions and in some places even in our internal ones the wars and other excesses and crimes of the USA.

So, the anouncement by China and Russia, as well as Venezuela and Iran, Argentina and Brasil, shall be followed by many others. Don´t forget that some years ago Europe was using the dollar as well.
The rise in the price of the dollar (not it´s value, an entirely different matter) is transitory and shall be followed by it´s demise as transaction and reserve currency of the world.

[Down Under]

Re: China, Russia renounce the dollar?

OK it's clear that Russia is loosing reserves fast, but why China is starving for dollars? :eek:

That is the truly interesting question.

For someone so bright, assuming you truly believe that China is starving for dollars, is simply astounding.

[metalman]

Re: China, Russia renounce the dollar?

DECLARATION:;)
We, citizens of the world are fed up with financing for free, trough the use of the dollar in our international transactions and in some places even in our internal ones the wars and other excesses and crimes of the USA.

So, the anouncement by China and Russia, as well as Venezuela and Iran, Argentina and Brasil, shall be followed by many others. Don´t forget that some years ago Europe was using the dollar as well.
The rise in the price of the dollar (not it´s value, an entirely different matter) is transitory and shall be followed by it´s demise as transaction and reserve currency of the world.

that's an interesting point. one of the mysteries of the dollar falling 37% 2002 - 2008 was... why? capital inflows were strong, not weak. the usa economy was for most of it growing. and now that it's shrinking, the dollar is up? isn't that the opposite of what the textbooks say?

did the adoption of the euro in 1999 cut demand for dollars enough between 2002 and 2008 to lower the exchange rate value of the dollar by 37%?

what if asia developed the yen in to an asia zone currency like the euro?

[due_indigence]

Re: China, Russia renounce the dollar?

This is the sort of unipolar thinking that seems to please people immensely. However economics is all about 'on the one hand, one the other hand.' No arch speeches are allowed. It's all about chutes and ladders, pushes and pulls.

A reserve currency's demise can be ardently wished for. I don't doubt the world's desire to divest itself of dollars. But it must first be supplanted by something else. There are no viable candidates. Current discussions about the euro center around its continued EXISTENCE. This is not the sort of talk that accompanies an heir apparent.

The world is pissed off, rightly so. I hate my mortgage company too. What's your point?

[touchring]

Re: China, Russia renounce the dollar?

that's an interesting point. one of the mysteries of the dollar falling 37% 2002 - 2008 was... why? capital inflows were strong, not weak. the usa economy was for most of it growing. and now that it's shrinking, the dollar is up? isn't that the opposite of what the textbooks say?

did the adoption of the euro in 1999 cut demand for dollars enough between 2002 and 2008 to lower the exchange rate value of the dollar by 37%?

what if asia developed the yen in to an asia zone currency like the euro?

the dollar is going up because there are economies in worst shape than the US, e.g. the uk, iceland, etc.

[Southernguy]

Re: China, Russia renounce the dollar?

Metalman wen´t farther than I had imagined. It didn´t struck me binding dollar fall with euro creation.
However, maybe he´s right.
I don´t think the world needs ONE reserve and transactions currency.
What about 5 o 6, namely, dollar for NAFTA countries, some currency for South American countries, another for Eastern Asian ones, another for oir rich Mid Eastern kingdoms and one for Russia-centric republics? Of course I can´t forget Africa which is already far behind in human development, but shall at some time catch up.
I can´t see any problem for countries holding most of their reserves in their zone countries currency, while their regional central bank keeps part of reserves in a mix of all the other currencies.
A variable, internationally negotiated rate of exchange, with the objective of avoiding huge value transfers between countries and regions and also stability.
No "senioreage" (whatever it spells) exploitation from one to another.
Sharp international banking regulations, some, not excesive commercial protectionism, heavily reduced speculative financial transactions troughout the world, more stability, less wars, a more even standard of living

[Southernguy]

Re: China, Russia renounce the dollar?

I forgot, of course, Britons and Swiss would keep their currency any how

[metalman]

Re: China, Russia renounce the dollar?

I forgot, of course, Britons and Swiss would keep their currency any how

look for a multilateral currency system in the future. a basket of currencies. before that, the shit has to hit the fan. the outcome is increasingly obvious.

the debate is over HOW the currency shit hits the fan.

usa makes a unilateral move that motivates a bunch of countries get together and gang up on the usa?

it's anyone's guess, but that's how our fearless leaders do things. that's what mccain would do. obama? he'd probably try to negotiate something.

[phirang]

Re: China, Russia renounce the dollar?

I will bet unlimited sums of money with anyone that the dollar remains the global reserve currency through 2010.

[friendly_jacek]

Re: China, Russia renounce the dollar?

that's an interesting point. one of the mysteries of the dollar falling 37% 2002 - 2008 was... why? capital inflows were strong, not weak. the usa economy was for most of it growing. and now that it's shrinking, the dollar is up? isn't that the opposite of what the textbooks say?

Metal, for god's sake, learn some economy!
Dollar was dropping 2002-2008 due to a negative account balance (negative trade balance). Now, with recession, imports went down, the negative balance shrank and vuala, dollar is up. Obviously, there are some more forces in the Forex markets, but this one should be enough to answer your question.

PS. There are more things in economy than the stuff you read on itulip.

[sirbrian82]

Re: China, Russia renounce the dollar?

I will bet unlimited sums of money with anyone that the dollar remains the global reserve currency through 2010.

i won't take that bet, but what about after 2010? do the unlimited sums of money for wagering come down?

[phirang]

Re: China, Russia renounce the dollar?

i won't take that bet, but what about after 2010? do the unlimited sums of money for wagering come down?

After 2010, the world could be ready for a nice, long war, and so I'm not so sure past 2010.