Wednesday 22 April 2009

Forget about gold...

Is China buying copper like crazy?
From the UK Telegraph last week:

China's State Reserves Bureau (SRB) has instead been buying copper and other industrial metals over recent months on a scale that appears to go beyond the usual rebuilding of stocks for commercial reasons.
Nobu Su, head of Taiwan's TMT group, which ships commodities to China, said Beijing is trying to extricate itself from dollar dependency as fast as it can.
“China has woken up. The West is a black hole with all this money being printed. The Chinese are buying raw materials because it is a much better way to use their $1.9 trillion of reserves. They get ten times the impact, and can cover their infrastructure for 50 years."


Everybody thought China would switch to gold. Instead they seem to buy industrial metals. Another thing is happening.
This message comes from Bloomberg:

China’s leaders... are making it easier for trading partners and consumers to do business in yuan.
The People’s Bank of China has agreed to provide 650 billion yuan ($95 billion) to Argentina, Belarus, Hong Kong, Indonesia, Malaysia and South Korea through so-called currency swaps. More such arrangements are being planned so importers can avoid paying for Chinese goods with dollars, the central bank said. In Hong Kong, which has pegged the currency to its U.S. counterpart since 1983, stores from Park’n Shop supermarkets to jewelers accept yuan.

Why is that?
We all know that the Chinese want to get rid with at least a part of their dollars and they are looking for ways to diversify their currency reserves. In exchanging swap lines they try to liquefy the yuan. Until now it’s almost impossible to buy and to sell yuan in the same way you buy or sell euros.
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