China signs currency swap worth 150 billion yuan with Switzerland

China positions itself and signs currency swap worth 150 billion yuan with Switzerland

http://www.reuters.com/article/2014/07/21/us-china-switzerland-currency-idUSKBN0FQ0H520140721

 

What a huge deal! China is the biggest country in the world and they will most likely be soon the biggest economy as well.

 

With that in mind China is already moving to be an effective global economy. With the US relying on receiving most of its goods from China I am not surprised China got a $24.17 billion dollars from Swiss Central Bank. That means they are going to have some interesting trades from time to time. I don't how low the trade risks would be but have to keep my eye on them.

 

Does this mean we have to now consider opening a REMNIBI ACCOUNT??

 

China is postioning itself as a direct competitor to the Euro and US dollar. Not good news for either USA or Europe.

 

It is wishful thinking. $24B is nothing.. this is basically a PR stunt by China, nothing more.

90% of the countries in the world you can go to a small village in the middle of nowhere and use US dollars. Everyone accepts it, everyone knows the daily conversion rate from their local currency etc. I would guess that almost nobody knows the name of the currency in China, let alone it´s conversion rate to the USD or their own local currency. I live in a little third world country that has horrible relations with the US, and still you MUST use the USD for almost any large purchase or financial agreement. You rent a house, the contract is in USD, you want to get a driver´s license.. USD.

One of the things that surprises me the most from my travels is how entrenched the USD is in local economies, even with countries that don´t even like us very much. I use USD everywhere where I live, to buy gas, groceries, a coke at the corner store, I pay my rent in USD. My guess nobody here was ever even seen the chinese currency.

 

The East is trying all they can to stop using the dollar. I think what emboldens China is the fact that along with Russia and China they've struck a deal that will see them in the near future ditch using the dollar for foreign trade transactions [at least that's amongst them, I suppose]. I'm sure it will take a really long time for many countries to embrace the usage of other currencies.

 

it is a very small amount, and in order for it to matter at all, it would have to be a signficantly larger amount, at which point the participating countries both are risking their currency slipping compared to the USD. If two countries trade in a currency besides the US dollar, then either country can take a huge loss by the tiniest slip in their ´receiving´currency compared to the USD. In order for those types of transaction to take place, BOTH countries would have to be willing to accept that risk.

 

I've been thinking about investing in some Chinese Yuan recently but now I'm wondering if I should pull the trigger or not. This MIGHT spike the price up really high then come straight back down. What do you guys think?

 

Just me personally, I don´t mess with investing in currencies because it takes a LOT of capital to make any money, they go up a fraction of a % and then quickly stabilize. It either takes a lot of capital to make money, or you need to make a lucky guess on an upcoming crisis ( ie Russia). I would be much more likely to bet in a currency crashing rather than invest in someone gaining.