Holy smoke - Australia / China currency swap

C

CriticalSilver

New Member
Silver Stacker
Well, in one more nail in the USD coffin, Australia has completed the largest currency swap with China "other than with Hong Kong and South Korea".

Australia will become more enmeshed in the Asian financial zone after the Reserve Bank signed a $30 billion currency swap arrangement with the Chinese central bank yesterday.

The historic agreement highlights the important role Australia is playing in what the Gillard government calls "the Asian century", as the world's fastest growing major economy integrates into global trade and financial markets.

The agreement, signed in Beijing by Reserve Bank of Australia governor Glenn Stevens and People's Bank of China governor Zhou Xiaochuan, -follows Beijing's decision last November to allow convertibility between Australian dollars and Chinese yuan in the interbank market in China.

The currency swap deal with Australia is the largest that China has signed other than with Hong Kong and South Korea. It is also one of the first with a Western economy.

China's currency is still not fully convertible as Beijing likes to keep the yuan undervalued to help its -manufacturing sector. But the deal with Australia is seen in official -circles as a crucial sign that China is committed to opening up its foreign capital account and making its -currency more convertible.

"I welcome the currency swap agreement," Treasurer Wayne Swan said. "This is an important symbolic step towards the internationalisation of the renminbi and another milestone in the continued deepening of the economic relationship between Australia and China."

Mr Swan said Australia had a strong interest in China's path towards full convertibility of its currency and that he looked forward working with China towards this goal.

While most of Australia's trade with China is still denominated in US dollars, some local companies are starting to write contracts in -renminbi.

Fortescue Metals Group announced late last year it had inked an agreement for $50 million worth of -Chinese mining equipment in the Chinese currency.

Read more at: http://www.afr.com/p/national/historic_pact_seals_china_ties_3EnHQZQ0Awvcj176ecKMjM
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Hmmm - will this make it easier for China to own Australia?
I don't see China doing anything that is not stacked in their favor.
 
Considering Julia's heavy Marxist background, i don't think its for the security of Australian investment/manufacturing. There is a double-speak or an agenda here somewhere...
 
Sultan Pepper said:
I think both sides just happen to think they're getting the better deal, a theoretical win:win.
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I really don't think so!

Slowly, slowly catchee monkey!
 
Maybe she's a stacker and wants to end the US reserve currency.

$30 Billion US dollars no longer required for trade with china.
 
I think the PTB know that USA will devalue soon after the US election and that will force a new world basket of currencies standard for trade. We'll see a lot more of these sort of deals throughout the year. We've already seen China-Japan (talk about forget old wounds for financial advantage!), Russia-China, Iran-India (gold trade for oil) and so it goes.

If you're in the USA you suffer all the hazards of a devaluation (Bernanke seems to indicate "up to 40%"), and the rest of the world finds their US dollar denominated assets massively reduced - except the physical.

This is not a circumstance we should wish for but I'm afraid it is already in the works. I'm assuming about 8-12 months window before the pain starts pouring down - unless 'they' really aren't in control, in which case it could be any day.
 
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