The reason for the low FED rate - do not allow the yuan of China become a reserve currency PDF Print E-mail
Sunday, 20 September 2015 13:46
After the Fed left rates unchanged, there was a variety of opinions, in which as the main reasons called mixed US economic indicators on inflation, unemployment, etc. However, for some reason no one remembered a very important geopolitical reasons that can explain this decision by the Fed rate, and which is most important for the US at the moment. Eto- decision will be whether the Chinese yuan from January 1, 2016 is included in the number of official reserve currencies with the US dollar, euro, pound sterling and the yen, to be adopted in November 2015 and can be reviewed again in just five years. The fact that the strengthening over the years rate of the Chinese renminbi to all world currencies and the US dollar (see Figure 1) after the Chinese yuan in the number of world currencies will make the Chinese yuan is far preferable to the dollar, euro, pound and yen, given that for the Chinese yuan is a large part of the world's industrial capacity, so do not yavletsya in the interest of the US, EU, UK and Japan to let the yuan has become a solid global reserve currency, especially in the US interest. And what did the United States to prevent this? And the United States is seeking to make their dollar as cheaply as possible, not allowing the interest rate to rise, which, given the global decline in consumption that is causing the decline in production volumes in China and makes China to devalue its currency, deskreditiruya investment attractiveness of RMB as global reserve currency . We saw this in the summer of 2015, when the Fed does not raise rates, and China was forced to make the US dollar more expensive, and their products more competitive, not by raising the Fed rate, it can not, and by unprecedented earlier devaluation of the yuan (Figure 2), although it tried to make it is still not on the scale that was required - the nominal exchange rate of the yuan to the dollar went from 6.15 yuan per dollar on Aug. 12, 2014 to 6.21 yuan per dollar on Aug. 10, 2015, but it is very important drugoe- despite such a small devaluation , the real exchange rate of RMB (taking into account inflation) against a basket of currencies of major trading partners of China has not decreased, and -UKrepilsya 12.9 percent, which caused a decrease in the competitiveness of Chinese products and the competitiveness of other Asian producers, who more dramatically weakened their currencies to the dollar, which led to a significant reduction in the rate of growth of the Chinese economy than expected, as I wrote earlier here - some of the economic indicators of China in September 2015 became the worst in 15 years. Thus, after the Fed's September 17, 2015 did not raise the rate and strengthen the dollar, in fact the Fed has shifted to China all the responsibility and put China in a very difficult situation, course of action which may lead to a very significant consequences on the stock, and in the commodity markets, in my view, China has three options: Variant№1. China is trying to promote the yuan in the number of the best world's reserve currency, for that China does not allow a devaluation of the yuan to November 2015, which further reduce the competitiveness of Chinese products, and the overall decline in consumer demand in the world will cause even greater slowdown in the Chinese economy than it was when or earlier, causing a catastrophic drop in oil prices, raw materials and many resources. Variant№2. China pursues a massive devaluation of the yuan, increases the competitiveness of their products, but strongly discredits the yuan as a reliable reserve currency, such a scale of devaluation reduces investor confidence in the yuan and generally put in the November issue of the admissibility of the inclusion of the yuan in the number of world currencies until 2021. Such an option the US has already used several decades ago by the example of Japan, which also wanted to replace the dollar with the yen, but we can see what it led to. Vriant№3. China pursues another discreet devaluation of the yuan, but the events of August 2015 shows that this is not sufficient and the data of the Chinese economy again will show a decrease, and that will cause another collapse in the stock market, and a further decline in oil prices and resources. Thus, the US Federal Reserve did very well, leaving the rate at a low level, as the world of the dollar is more important than any internal indicators of the US economy, although it may lead to a global economic crisis, which could begin in China because of provoking it on such actions of the Fed decision, but nevertheless, the strategic goal of the United States - is to leave the dollar the world's reserve currency and that they manage at the moment.



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