Tag Archives: renminbi

China Expected to Shake Up Oil Markets

China Expected to Shake Up Oil MarketsChina is preparing to launch an oil futures contract based on its domestic currency instead of dollars in an effort to promote the renminbi as a global reserve currency.

It appears the liberal mainstream media is finally waking up to what TruNews readers have known for several months, that China is about to launch domestic oil futures trading not valued in American dollars, which will hugely impact the dollar’s “well-established role” as the global currency of trade.

According to a new report, the “petro-yuan” futures contracts will be offered beginning Jan. 18, following multiple rounds of testing. The Shanghai Futures Exchange will be traded under the “INE” acronym. Like all futures contracts, it will set a price in the present for the delivery of oil at a future date. Futures trading usually outpaces physical oil trading by a more than 20-to-1 ratio.

This will allow the yuan to undercut the dollar in global trade in the long term. In the short term, it’s unlikely to have a major impact on the dollar, the petro-dollar, or global trade. The Chinese oil futures contracts also will not have the relative stability of dollar-based oil contracts, and it’s unlikely non-Chinese investors will be allowed to participate initially. But President Xi Jinping seems to be focused on a long play.

From TruNews

Posted by The NON-Conformist



China Wants To Wean Itself Off The Dollar, But Risks Destroying Chinese Wealth

lan Wheatley, Global Economics Correspondent for Reuters has written a very interesting article, ‘Analysis: China’s currency foray augurs geopolitical strains’ where he emphasizes China’s desire to wean out the US dollar’s currency reserve status.

yuan renminbi
Image: Business Insider

China is actively taking steps to phase out the US dollar which will decrease volatility in oil and commodity prices and deride the ‘exorbitant privilege’ the USA commands as the issuer of the reserve currency at the centre of a post-war international financial architecture which is now failing.

In 1971, U.S. Treasury Secretary John Connally said, “It’s our currency and your problem”.

China is frustrated with what it sees as the US government’s mismanagement of the dollar, and is now actively promoting the cross-border use of its own currency, the yuan, or also called the renminbi, in trade and investment.

China’s goal is to decrease transactions costs for Chinese importers and exporters.

Zha Xiaogang, a researcher at the Shanghai Institutes for International Studies, said Beijing wants to see a better-balanced international monetary system consisting of at least the dollar, euro and yuan and perhaps other currencies such as the yen and the Indian rupee.

More from Business Insider

Posted by The NON-Conformist