Let’s rewind two years, to a time before ‘credit crunch’, ‘quantitative easing’, ‘TARP’ or ‘staycation’ had entered the popular vocabulary. I’m talking about a time in which the term ‘currency manipulator’ was part of the zeitgeist of US-China economic relations. Today, G20 summits come and go without this phrase, which once seemed almost ubiquitous, being [Read more...]

During Brazilian President Lula’s recent visit to China, the leaders of the two countries have been discussing, among other things, the prospects of abandoning the US dollar in bilateral trade operations. This would mean that Chinese importers would purchase Brazilian goods in Chinese yuan, and vice versa.

Personally, I couldn’t agree more with former Brazilian [Read more...]

Calls by China and Russia for a new global reserve currency – possibly based on the IMF’s special drawing rights (SDRs) – reflect Beijing’s and Moscow’s concerns about a potential decline in the US dollar, and by extension, the value of their own substantial dollar holdings. Indeed, yesterday was the second time in as many [Read more...]

One interesting aspect of the current global economic funk is the speed at which China has gone from desperately trying to cool its economy from overheating to desperately trying to boost it. We have already seen aggressive rate cuts, a mammoth fiscal stimulus package, and a halt – indeed, mild reversal – in the rise [Read more...]

It was not too long ago that everyone was asking ‘when will China finally let the yuan go?’ [i.e. appreciate rapidly]. Indeed, back in March, when consumer price inflation was at 8.3% y-o-y, non-deliverable forwards (NDFs – a basic measure of investors’ expectations) were pricing in 13% appreciation for the yuan over the following 12 [Read more...]

Is China entering a time of troubles? Yesterday’s 0.27% interest rate cut – the first in six years – and today’s 4.5% fall in the Shanghai Composite Index to a 20-month low of 1,987 may suggest so. The stock market is now down 68% from its peak in October 2007, and I do not preclude [Read more...]