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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (75511)	6/22/2011 5:01:06 AM
From: elmatador	1 Recommendation Respond to of 217645

"the English are in short supply in London". They exported civilization. Then the civilized: Pakistanis, Indians, Nigerians came back to London since they were on par with the English.

To: Maurice Winn who wrote (75511)	6/22/2011 7:41:37 AM
From: elmatador	1 Recommendation Respond to of 217645

at the forefront of Beijing’s grand project to internationalise the renminbi. The scheme is being driven by the Asian country’s ambition of using the renminbi in more of its trade so as to avoid accumulating endless amounts of foreign currency reserves. Beijing will need to strengthen its financial system to the point that it can confidently float the renminbi. It will then need to be prepared to weather the shocks that might accompany such a move. The state planners will not be able to have a reserve currency and keep all of their capital controls. Or, as Mr Goldfajn told the panel: “I don’t think you can cook an omelette without breaking the eggs.” Redback vies for share of Latam trade June 7, 2011 3:58 am by Joe Leahy The past decade was the best for the economies of Latin America in a century, according to Ilan Goldfajn chief economist at Itaú Inibanco. The reason mostly has to do with China. Trade between the region and the Asian emerging giant rose about sixfold during that period making China in effect “the other half of Latin America”, Goldfajn told a recent panel hosted by the Americas Society /Council of the Americas on the internationalisation of the renminbi . Given this incredibly fast-growing relationship, then surely Latin America should be at the forefront of Beijing’s grand project to internationalise the renminbi. The scheme is being driven by the Asian country’s ambition of using the renminbi in more of its trade so as to avoid accumulating endless amounts of foreign currency reserves. So far, however, the so-called “redback”, with its portrait of a slightly bemused looking Mao Zedong, seems yet to gain significant traction in Brazil, Latin America’s largest economy. No one can dispute that the renminbi project is blossoming in Asia. Consider this Goldman Sachs report on the state of renminbi deposits in April in Hong Kong. Goldman Sachs – GS Global ECS Research. RMB deposits in the Hong Kong system reached Rmb510.7 billion in April, representing an increase of Rmb59.3 billion from Rmb451.4 billion in March (13.1% mom growth). At Rmb510.7 billion, it is around 8.5% of total system deposits in Hong Kong, and only 0.7% of the total deposits of Rmb75.6 trillion in mainland China. The total remittances of RMB for cross-border trade settlements came in at Rmb134.2 billion in April (16.2% mom growth), after a total of Rmb115 billion in March (see Exhibit 3). As the usage of the RMB Trade Settlement Scheme is now increasingly more balanced (i.e., used in both China’s exports and imports), there will be more “two-way” RMB flows between onshore and offshore markets via the trade channels, and we would expect this trend to continue going forward. China’s cross-border RMB trade settlement totalled Rmb530 billion during the first four months of this year, with 84% (Rmb445 billion) conducted via Hong Kong. We expect more expansion of the cross-border trade settlement scheme to all cities and provinces in China late this year. We expect the greater usage of RMB for cross-border trade settlements will continue to be the key driver for Hong Kong’s RMB deposit expansion going forward. Clearly, the growth of RMB deposits in Hong Kong and other countries outside China will likely provide a catalyst for more RMB trade settlement, creating a virtuous cycle of trade-activities driving the growth of RMB deposits. In Brazil, by contrast, few big businesses are as yet using the renminbi. For instance, in spite of its huge trade with China, iron ore miner Vale conducts no significant business in renminbi beyond the expenses of its Beijing and Shanghai offices and the operations of a nickel refinery in Dalian. Once the regulatory environment is more favourable, for instance, when local central banks change the law to allow renminbi settlement in the region, one would expect this to change. After all, for exporters to China, the renminbi is a good bet. It is regarded as under-valued by most economists and is expected to appreciate over time. The question is, even then, how much business would companies such as Vale choose to conduct in renminbi? Commodities are after all priced in dollars. Ditto for the region’s central banks. Aside from its many other faults, the dollar’s resilience as a reserve currency has been stress tested by the recent financial crisis. For the redback to become a proper reserve currency, Beijing will need to strengthen its financial system to the point that it can confidently float the renminbi. It will then need to be prepared to weather the shocks that might accompany such a move. The state planners will not be able to have a reserve currency and keep all of their capital controls. Or, as Mr Goldfajn told the panel: “I don’t think you can cook an omelette without breaking the eggs.” Another panelist, Neil Daswani, head of transaction banking for North East Asia at Standard Chartered Bank, pointed out, however, that China is in no hurry. For now, Beijing will be happy to see a gradual rise in the use of the renminbi in trade with Latin America. The issue of it as a fully fledged reserve currency is something for later on. Betting against Beijing’s state planners is a risky business. But it may be a while yet before the redback rather than the greenback dominates China’s trade with Brazil and the rest of Latin America. blogs.ft.com