IMF gives AUD reserve status

[JulieW]

So what's this mean folks?

http://rt.com/business/imf-reserve-currencies-909/

IMF confirmed that the AUD and CAD will appear as reserve currency within three months. This emphasizes the spiraling demand for additional reserve currencies and the New Zealand dollar has the best chance to join the list, according to experts.

"The IMF is expanding the list of currencies separately identified in the Composition of Foreign Exchange Reserves reporting (COFER) template," said an IMF spokeswoman as cited by The Wall Street Journal. "The implementation of the revised COFER Report Form, with separate identification of the Australian dollar and Canadian dollar, is scheduled for the first half of 2013."

The IMF holds report figures of the global reserve holdings in a database known as the COFER mainly in just five currencies, deemed by many investors to be among the world's safest: US dollars, euros, British pounds, Japanese yen and Swiss francs.

Recent economic problems associated with the euro and the dollar set a continuing trend for the diversification of the reserve currencies as a way out from the volatility, Yaroslav Lissovolik, chief economist at Deutsche Bank in Moscow told RT.

"It is definitely a trend and this trend will continue. There is a global demand for more reserve currencies. The world economy wants to diversify the set of reserve currencies as a way from the volatility and the problems associated with the current reserve currencies, because both US and Europe are plagued by economic problems. This is natural and clear that the global economy should use more foundations, more columns on which to stand and build a stronger foundation of a more complex global economy," said Lissovolik.

 

[hem9]

So what's this mean folks?

http://rt.com/business/imf-reserve-currencies-909/

IMF confirmed that the AUD and CAD will appear as reserve currency within three months. This emphasizes the spiraling demand for additional reserve currencies and the New Zealand dollar has the best chance to join the list, according to experts.

"The IMF is expanding the list of currencies separately identified in the Composition of Foreign Exchange Reserves reporting (COFER) template," said an IMF spokeswoman as cited by The Wall Street Journal. "The implementation of the revised COFER Report Form, with separate identification of the Australian dollar and Canadian dollar, is scheduled for the first half of 2013."

The IMF holds report figures of the global reserve holdings in a database known as the COFER mainly in just five currencies, deemed by many investors to be among the world's safest: US dollars, euros, British pounds, Japanese yen and Swiss francs.

Recent economic problems associated with the euro and the dollar set a continuing trend for the diversification of the reserve currencies as a way out from the volatility, Yaroslav Lissovolik, chief economist at Deutsche Bank in Moscow told RT.

"It is definitely a trend and this trend will continue. There is a global demand for more reserve currencies. The world economy wants to diversify the set of reserve currencies as a way from the volatility and the problems associated with the current reserve currencies, because both US and Europe are plagued by economic problems. This is natural and clear that the global economy should use more foundations, more columns on which to stand and build a stronger foundation of a more complex global economy," said Lissovolik.

AUD is supposed to go up as currency traders, investment banks and pension funds can use this currency in their portfolio (reserve status), probably will go up as the other currencies of larger nations (euro and yen) are so bad fundamentally, I can anticipate funds would like to move into currencies with such a status.

 

[Peter]

If aud rises, gold in aud will fall proportionaly.
Unless there is a jump in the price of gold(and silver)

Still, I think aud is due for a fall against gold soon.
As the commodity market collapses.
Maybe.
Who knows.
However, gold still the best bet in dangerous times.

 

[Dogmatix]

In theory, increased demand for AUD = higher AUD

In practice, it probably depends what the RBA does on the sly to accommodate such demand (eg, print money).

One possible downside to this is that now we're 'official', there is more issue on us to manage our currency according to the rules (the same rules that other larger countries continually break). Australia being political wimps means that we'll likely have be restrained when it comes to currency manipulation.

It may be good for our banks though?

Personally I've always had trepidation over our currency being traded in such high volumes - we're not an economic heavyweight, and there is more danger than benefit IMO.

 

[mmm....shiney!]

Could be the IMF is looking to increase the value of it's SDR's as the basket of currencies currently used to determine the value of SDR's are all on the nose, therefore by default, the value of SDR's are on the nose. Broadening the basket of currencies used in determining the value of SDR's enables greater trade in them, as they can only be bought and sold using those currencies: which at the moment are the USD, JPY, the Euro and the GBP. This increases their attractiveness and relevance to the market and increases their liquidity which in turn also increases their attractiveness and the behemoth grows.

As far as the impact on the AUD? I'm with doggie on this, who knows? :/

Another scenario though is that if the AUD is listed as a reserve asset, we may well come under continual pressure to ensure the liquidity of our currency due to increasing demand, this may result in the need to print more and more AUD, driving the price of it down and in the long term thereby defeating the IMF's agenda in exposing SDR's to less volatile currencies. But remember, long term is nothing that the IMF is that interested in (with the exception of it's one world currency agenda)

The thought that a bureaucratic organisation not answerable directly to any citizens is able to call any financial shots is abhorrent to me, and yes before the big government boys argue that as an arm of the UN, it is answerable to the nation-states' elected representatives on the UN itself, I say bollocks to that. It's just more evidence of market manipulation designed to protect the status qo and screw the impact it has on the real people of the world.

 

[SilverSanchez]

I agree with the above -

AUD being classified as part of a reserve currency basket means that it is possible the demand will increase while supply is stagnate because of the conservatism of the RBA chief.

This could put MASSIVE pressure on the manufacturing industry and therefore putting MASSIVE pressure on the RBA to relieve the pressure on industry. We could have a bad deflation in Australia as a mid-term result, because prices in Australia for consumer goods are some of the highest in the world. We could go through a genuine depression because our value of cash is high and put downward pressure on wages because our products are un-competitive in the global market.

This is GREAT for international investors as the trend in the world is INFLATION of money supply - who wouldn't swap a devaluing currency for an appreciating currency?
we could be really screwed if the RBA holds the line and refuses to ease equal to or less than the appreciation rate. This is what was happening to the Swiss Franc a few years ago when they pegged their currency to the Euro.

 

[SilverSanchez]

The reason why deflation is not bad for gold is the following

Increase value in a dollar = downward pressure on wages or even massive unemployment or 'no-wages'

Increase value in a dollar = lower price for gold

Decreased wages due to increase in value of dollar = able to buy proportionally less cheaper gold (theoretically)

This is why Cash is King in a deflation and gold is theoretically neutral.
But when the rest of the world is inflating - the population seeking more gold to preserve purchasing power = less physical supply for Australian buyers
Therefore gold price in AUD may remain constant or even go up, rather than come down - due to far less population of Australians compared to population of countries who are devaluing.

But think for a second, will the unions really let wages fall? They lobby so hard for wages to increase with inflation, but I bet they are so dishonest they will still fight for higher wages in a deflation. I hate socialism.

Does this all make sense or have I explained it poorly?

 

[Dogmatix]

^ can deflation officially exist in a western country dedicated to Keynesian policies?

Greenspan and Bernanke say 'no'. Is Glenn Stevens just like them?

A higher AUD would hurt us bad, I'm not sure there's an upside, besides a forced reevaluation of our industry.

 

[bordsilver]

Jeez, c'mon guys. We want the RBA to move back to sound money** remember and NOT be printing arbitrarily. Switzerland did the wrong thing not the right thing.

http://forums.silverstackers.com/message-486007.html#p486007


** Technically we want to abolish the RBA and legal tender laws and let the market to naturally move to sound money, but next best thing.

 

[SilverSanchez]

I suspect the Global Elites (Global Socialists) want to use CAD and the AUD as hedges for their irresponsible global financial plans irrespective of who they hurt.

This is why socialism and communism (which is basically a socialist in a hurry with a gun) really do obliterate production and impoverish the vast majority of the population, while keeping a slim class of elites in wealth - the global rise of the world dictator - A good handle on Biblical prophecy is key in this march towards Global Pantheistic Socialism.

The Bible is
- Pro private property (You shall never steal)
- Pro free market (You shall never covet another man's possessions)
- Pro family stability (You shall never commit adultery)
- Anti-womb to tomb welfare (You shall honor your mother and your father)
- Pro rule of law (You shall never bare false witness)
- Pro government accountability (You shall never murder)

Also - money printing is expressly prohibited in the Bible

Proverbs 20:10
Amplified Bible (AMP)
10 Diverse weights [one for buying and another for selling] and diverse measuresboth of them are exceedingly offensive and abhorrent to the Lord.

Every one of the 10 commandments whacks hard in the face of communism!
I hate communism

 

[JulieW]

Could it be that:

AUD is a commodities based currency
The current reserve currencies are devaluing = inflation = commodities rise.
AUD one of the most traded currencies
Giving 'Reserve Status' allows contracts to be denominated in AUD - ie the USD gets another nail in its coffin.
Commodities Rise. AUD rises. Hedge funds etc which are required to hold cash in Reserve Currencies buy up AUD. (my assumption but RC is probably Tier 1 asset)
Massive printing by RBA in face of new circumstances.
Fx markets bounce the AUD bigtime and all our rocks and mines are suddenly very cheap.
AUD goes back toward 70c equivalent and we go back to the banana republic status of the 70s with big inflation and a similar road to Argentina.
(
https://donttweetblog.wordpress.com/2010/11/10/as-rich-as-an-argentine/
http://www.wallstreetoasis.com/blog/as-rich-as-an-argentine
http://www.thirdworldtraveler.com/South_America/RichCountryBust_Argentina.html
)

My premise being that the IMF is controlled by gangsters and since Oz is just a quarry on the edge of the world, that quite a few industrialists would like to own and the big ones have a lot of influence at the IMF and they'll do whatever is in their interests without consideration of us or our society.

Or pessimistic scenario 2 is that they grab our gold to back AUD as part of the basket of currencies pulling the world out of its debt whirlpool.

Or optimistic scenario 1
ummmm
errrrr
...
.
oh they're talking of the NZ Dollar joining us on the world stage.
(depends on box office for "The Hobbit" probably)
(that was possibly a joke).

 

[Holdfast]

It means to me that the USD (Which was the worlds reserve currency) is on a downwards spiral.

It means to me that the Aussie dollar is strong and that there are other countries buying our currency hand over fist.

It means to me that if others are buying the Aussie, they are losing faith in the USD.

It tells me that coutries that are holding USD would like to swap some of their USD because QE (priniting more and more USD) is eroding away the buying power of those who hold USD.

The US is in the Shite, The PIIGS are in the Shite, world currencies like the USD and Yen are in the shite which tells me to be prepared for currency wars.

If you are an Aussie, hold onto some of your Australian dollars because you'll be able to pick-up bargains from overseas; keep an I on the exchange rates because even with expensive postage you could get a few bargains in the future.

Also, if you already have a good stack of precious metal, you have the luxury of waiting for an oversold market to buy. What I mean by that is to have patience, if you miss close to the bottom, so be it but just try your luck at waiting for silver to retrace a little more.

We could see under 27 again which could be a reasonable price to add a few ounces.

http://www.kitco.com/LFgif/ag2012.gif

http://www.kitco.com/LFgif/ag2013.gif

 

[mmm....shiney!]

It means to me that the USD (Which was the worlds reserve currency) is on a downwards spiral.

That is true for a while maybe, but ultimately the USD is still the Reserve Currency (although some countries are dealing directly with others without using the USD, trading their own currency or using gold), reserve assets are a different kettle of fish, or chooks or bok choy if you are a vego. The IMF is not suggesting the USD is to be replaced as the world's Reserve Currency, only the reserve assets that make up the basket of currencies used to determine the foreign exchange reserves.

It means to me that the Aussie dollar is strong and that there are other countries buying our currency hand over fist.

Yes unfortunately.

It means to me that if others are buying the Aussie, they are losing faith in the USD.

Yes, which long term is a good thing but mid-term will cause much angst.

It tells me that coutries that are holding USD would like to swap some of their USD because QE (priniting more and more USD) is eroding away the buying power of those who hold USD.

Maybe, it's hard to tell what the powers that be actually desire, but you can be guaranteed that if the shite actually hits the fan, the first place of refuge will be the USD, until they release they are floating on a rice-paper boat. And then, the fun will begin. :lol:

The US is in the Shite, The PIIGS are in the Shite, world currencies like the USD and Yen are in the shite which tells me to be prepared for currency wars.

Yep agree. But don't forget the AUD is in the shite as well. You swim in the sewer, you stink like the other fish. (Wow, I'm full of quotable phrases tonight lol)

If you are an Aussie, hold onto some of your Australian dollars because you'll be able to pick-up bargains from overseas; keep an I on the exchange rates because even with expensive postage you could get a few bargains in the future.

Why would you want to hold AUD just to spend on overseas shite? Hold cash in AUD only as a source of easy to get funds if you need to survive or escape. If you don't, spend it on assets that return an income that may protect you if you lose your job, or buy gold, or keep tonnes of paper to pay off the mortgage if you have one.

We could see under 27 again which could be a reasonable price to add a few ounces.

That is crystal ball gazing and has little to do with the OP, but I understand your sentiment

 

[SilverSanchez]

The reason Governments are terrified of deflation si because you cant hide theft or government withholding cash in deflation. During high inflation or hyperinflation they can brag and promise the MOOOOOON to people over the next 5-10 years, but in the end their $2trillian promises are only worth a measlie $200million in todays money.

Inflation is the preffured theft vehicle because it is stealthy! Your getting more money in but its able to buy less, psychologically its a frog in a pot of cold water. By the time you realise - its too late.

Maybe Australia is one of the countries that the IMF has decided must fall on it's sword and go into a depression.

 

[Holdfast]

It means to me that the USD (Which was the worlds reserve currency) is on a downwards spiral.

That is true for a while maybe, but ultimately the USD is still the Reserve Currency (although some countries are dealing directly with others without using the USD, trading their own currency or using gold), reserve assets are a different kettle of fish, or chooks or bok choy if you are a vego. The IMF is not suggesting the USD is to be replaced as the world's Reserve Currency, only the reserve assets that make up the basket of currencies used to determine the foreign exchange reserves.

It means to me that the Aussie dollar is strong and that there are other countries buying our currency hand over fist.

Yes unfortunately.

It means to me that if others are buying the Aussie, they are losing faith in the USD.

Yes, which long term is a good thing but mid-term will cause much angst.

It tells me that coutries that are holding USD would like to swap some of their USD because QE (priniting more and more USD) is eroding away the buying power of those who hold USD.

Maybe, it's hard to tell what the powers that be actually desire, but you can be guaranteed that if the shite actually hits the fan, the first place of refuge will be the USD, until they release they are floating on a rice-paper boat. And then, the fun will begin. :lol:

The US is in the Shite, The PIIGS are in the Shite, world currencies like the USD and Yen are in the shite which tells me to be prepared for currency wars.

Yep agree. But don't forget the AUD is in the shite as well. You swim in the sewer, you stink like the other fish. (Wow, I'm full of quotable phrases tonight lol)

If you are an Aussie, hold onto some of your Australian dollars because you'll be able to pick-up bargains from overseas; keep an I on the exchange rates because even with expensive postage you could get a few bargains in the future.

Why would you want to hold AUD just to spend on overseas shite? Hold cash in AUD only as a source of easy to get funds if you need to survive or escape. If you don't, spend it on assets that return an income that may protect you if you lose your job, or buy gold, or keep tonnes of paper to pay off the mortgage if you have one.

We could see under 27 again which could be a reasonable price to add a few ounces.

That is crystal ball gazing and has little to do with the OP, but I understand your sentiment

*Overseas shite = metal bargains or sort after numismatics.

*Crystal ball gazing and nothing to do with the Ops ? - who gives a shite?

 

[mmm....shiney!]

*Crystal ball gazing and nothing to do with the Ops ? - who gives a shite?

Me, I still have bills to pay and a business to operate. :/

 

[JulieW]

Maybe Australia is one of the countries that the IMF has decided must fall on it's sword and go into a depression.

That is a realistic fear to have in my view.
Our dollar quite low would benefit a lot of buyers of commodities.

 

[Dogmatix]

IMO one national advantage to having a high dollar is that less funny money will come to our shores and buy up our mines/farms/resources (milkin' cows) because they become too expensive.

Another is that internationally funded debt becomes easier to service.

And of course we can import stuff cheap or travel the world feeling rich.

But in general it's a big steaming pile of feces (with added drugs and hormones).

 

[SilverSanchez]

IMO one national advantage to having a high dollar is that less funny money will come to our shores and buy up our mines/farms/resources (milkin' cows) because they become too expensive.

Another is that internationally funded debt becomes easier to service.

And of course we can import stuff cheap or travel the world feeling rich.

But in general it's a big steaming pile of feces (with added drugs and hormones).

And welfare gets extremely expensive - people dont like to see less or lower numbers on their 'other peoples money' cheques