Posted on 07/10/2011 8:57:44 PM PDT by Nachum
Remember when the dollar reigned supreme, and nobody cared about that joke of a currency, the Chinese Renminbi? Neither do we. And neither does the CME, which just announced it is launching USD/CNY futures, which will be available in standard and E-micro sizes beginning August 22. Put otherwise, with one fell swoop the CME will now allow one to transform liability risk, credit and maturity of underlying assets from one currency to another, while on margin (granted, exposed to the same margin shenanigans that make silver bulls scream blood murder every time the CME's name is mentioned). And the CME is just the beginning of what soon will allow everyone to denominate their liability exposure into the Chinese currency. In the process, the dollar lost yet another battle, as it continues to lose the war.
From the CME:
(Excerpt) Read more at zerohedge.com ...
Another nail in the coffin is a perfect analogy for the dollar's impending collapse.
I don’t like it. But with several noticeable trends in policies, it was bound to happen.
Does anyone that is sane and rational still doubt Obama’s agenda of American destruction? Will the Congress ever stop him?
We’ll probably be in a full blown depression this time next year.
Mr. Lazy Present? An agenda to destroy America? I'm sorry, I'm pretty sane and rational, and don't give him anywhere near that much credit. He is hopelessly out of his depth, completely out of the loop politically, and likely mystifies the Democrat leaders as much as the Republican leaders on how he flies from one issue to another without the slightest grasp of what he's talking about.
Bernanke is a Bush appointee, the same Bush who brought us the inane currency and commodities tracking in the 'Patriot Act', who signed the No Teacher Left Behind, who brought us the TSA goonfest, etc... America's destruction is centered in Washington DC, being brought to us by the people who are elected to follow the constitution, but feel that they are above such a document, and above the opinions of the people.
The Present in the White House is too busy pouting because he had to put off yet another vacation for this latest crisis to be plotting America's destruction. That's being carried out by the endemic socialism within the staffers of congressmen, senators, agencies and courtrooms across the federal government, and being cheerleaded by the mainstream press.
Define recently... In 1995 it was ~8.25 RMB per USD, and it’s slowly increased in value since that time...
the Chinese economy is doomed.
Chinese save something like 30 or 40 percent of their income.
That ie WAY too much.
Leads to real estate speculation and the construction
of ghost cities. On top of that,
nobody knows who owns land.
The RMB has had a conversion rate in the range of about 8.25:1 for over 15 years. However, this rate was pegged 1:1 against the dollar for pretty much the entire time.
From time to time (the last being about a year ago at the G20), the Chinese have announced, under international pressure, that they will cut the Yuan loose to seek a level closer to its purchasing power parity. However, in practice, they have yet to do this.
Sorry about the confusion.
Trading in futures of the Chinese yuan? No thanks, especially with China’s recently-revealed scandal on a gigantic amount of bad bank loans. And China has not addressed the issues of overpopulation, major pollution of air, water and land, and the extreme disparity between the rich and poor.
I don't follow... If the rate is about 8.25:1 then how is it pegged at 1:1?
The conversion rate from RMB into USD was about 8.25:1 and pegged to the U.S. dollar on a 1:1 basis.
To illustrate, assume the USD was converted into Euros at, say, 1 USD = 1 EUR. In this case 1 EUR could be exchanged for 8.25 Yuan. Now assume that the dollar loses one half of its purchasing power against the Euro. In the case, the collar would be converted at 2 USD = 1 EUR. Similarly, because it is pegged with the dollar, the RMB would be lose half of its purchasing power against the Euro and be exchanged at the rate of 16.5 Yuan = 1 EUR.
Huh - seems like a lot of extra complexity to me. It was pegged at 8.25:1, now it’s pegged around 6.46:1. Rather than adjusting a secondary conversion ratio to create a 1:1, why not just state what the conversion is? I’ve never seen the conversion rate - floating or pegged (which includes HKD and a few other currencies that are pegged or limited to a small float range).
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