24 Nov 2010

This Year, I’m Thankful That I’ve Been Bearish on the Dollar

Financial Economics 4 Comments

This sounds a little ominous (HT2 someone-on-Facebook):

St. Petersburg, Russia – China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.

Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.

“About trade settlement, we have decided to use our own currencies,” Putin said at a joint news conference with Wen in St. Petersburg.

The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.

The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.

“That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries,” he said.

4 Responses to “This Year, I’m Thankful That I’ve Been Bearish on the Dollar”

  1. Mike Sandifer says:

    Bob, might this merely reflect the expectation of rising dollars hurting China’s exports to Russia? After all, there are again growing problems in the EU and headwinds against QE here in the US. Remember what happened to the dollar when EU sovereign debt concerns flared in the spring and early summer?


  2. scharfy says:

    Ahhhhh, this is priceless.

    They are gonna “stick to the Rubles and Yuans” That’s just hilarious. Think about that for a minute.

    Oh and premier Wen, if our dollar is so terrible – why are you pegging to it?

    We should start getting nasty with China and stop giving them unfettered access to US multinationals production – while they ban Google from entering their country, and exercise capital controls.

    Yes the international reserve currencies, Rubles and Yuans…. Keep dreaming

  3. Shannon PIetro says:

    Nice to see that everyone is keeping it intense this holiday morning.

    To add to the tradition: this year I am thankful for all that I have acquired through barter. Participating in such a circle has forced me to re-think what I have to offer others besides cash in trade for time/stuff/skills/wisdom/instruction. It’s been a challenge and a blast.

  4. AP Lerner says:

    This announcement is meaningless. What’s important is the currency a country saves in, not what currency the country transact in.

    My free advice: buy USD. It’s about to rally and rally hard.