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Epoch Times
19-05-2025
- Business
- Epoch Times
The Yuan Will Not Replace the Dollar Any Time Soon, If Ever
Commentary For some years now, financial media have speculated about when China's yuan will replace the U.S. dollar as the world's premier international currency—what bankers and currency traders refer to as the 'global reserve.' As an export-oriented economy in which sales to the United States account for 3 percent of the country's gross domestic product (GDP), Beijing knows that China's prosperity is much more vulnerable to Sino–U.S. trade than American prosperity is. Private analysts estimate that this trade involves some 16 million Chinese workers. With this much at stake and economic troubles to worry about, China's trade negotiators have no desire to antagonize their American counterparts with triumphant declarations on currency matters. More fundamentally, Chinese authorities know—or should know—how very far the yuan is from achieving global reserve status. To be sure, the U.S. economy and the dollar no longer have the overwhelming dominance they once did. That is clearly a consideration that every nation on Earth has taken into account. Even so, no other currency—especially the yuan—has the necessary characteristics to take the role over from the dollar. What may make Beijing even less eager to tout the yuan as a dollar replacement is the realization that the yuan could only gain the necessary characteristics to supplant the dollar if the Chinese Communist Party (CCP) becomes willing to ease the tight financial and currency controls that it otherwise treasures and is not likely to surrender. Related Stories 4/12/2025 1/27/2025 Custom constitutes the first hurdle for the yuan's ambition. The CCP has tried hard to elevate the yuan's status in what some have called a ' Yet for all this effort, and the expense that goes with it, the dollar still dominates. Some 80 percent of global trade is conducted in dollars, even when Americans are not involved. The dollar lies on one side or the other in some 90 percent of all currency transactions. In contrast, the yuan is present in a mere 4 percent of such transactions, and even the euro can claim only 30 percent. The conversion of Egyptian pounds into yuan, for instance, typically occurs via the dollar. These powerful relationships have taken years to develop, and it would take years for the yuan to unwind in its favor. Liquidity presents a second challenge for the yuan. It is possible to trade dollars and dollar assets 24 hours a day, seven days a week. Dollar markets are so large and well developed that people can move huge sums easily and with minimal effect on prices of either currencies or financial assets. Dollar markets also offer a huge variety of financial instruments, making them attractive to traders and their financial backers who, in the course of their business, must hold balances in whatever currency serves as the 'global reserve.' These crucial players treasure these characteristics and know that the yuan-based markets cannot match them. As should be clear, the CCP in the best of circumstances would face years of effort and promotion even to begin to challenge the dollar's global position. And it is not even clear that Beijing wants to make the needed sacrifices. To do so, for instance, would require regulators to abandon the tight control over the yuan's foreign-exchange value and let it float freely on global currency markets. To offer exporters, importers, and their financial supporters the liquidity and a variety of investment instruments they need, Beijing would have to give up its present insistence on controlling capital and investment flows into and out of the country. Theoretically, of course, Beijing could make such adjustments. Still, since they would fly in the face of the CCP's obsession with control, the yuan fails even as a starter in competition with the dollar for global reserve status. Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
Time of India
17-05-2025
- Politics
- Time of India
Chinese leader refers to Mount Everest as ‘Chomolungma' at Nepal forum, raising eyebrows
China's Standing Committee Vice Chairman Xiao Jie standing left to Nepal's PM KP Sharma Oli (Image Credit: Oli's X account) China's Standing Committee Vice Chairman Xiao Jie referred the Mount Everest as " Chomolungma ," the Chinese name in one of the events in Nepal. During his presentation at the Sagarmatha Sambaad 's opening session, Xiao Jie exclusively used the Chinese designation, while other participants referred to the peak using its English and Nepali names, ANI news agency reported. The event itself bears the name "Sagarmatha Sambaad," with Sambaad being the Nepali word for conversation. As the keynote speaker at the three-day event's opening, Xiao Jie delivered his speech in Chinese with translation support. Throughout his 20-minute address, he used "Chomolungma" ten times, disregarding the event's official title. A foreign minister official, speaking anonymously to ANI, acknowledged awareness of this but expressed inability to intervene. The Chinese official's use of the Sino name occurred in the presence of Prime Minister KP Sharma Oli , foreign minister Arzu Rana Deuba, finance minister Bishnu Paudel, and over 200 international participants. Prime Minister Oli had previously advocated for using "Sagarmatha" as the peak's official name. However, he remained silent about the Chinese dignitary's choice of terminology at Friday's event. The Kathmandu event attracted delegations from various nations including Bangladesh, Bhutan, Nepal, the United Kingdom, the UAE, Japan, India, Qatar, Kyrgyzstan, Brazil, Egypt, Oman, and Pakistan. Representatives from international organisations such as the UN, World Bank, Asian Development Bank, SAARC, BIMSTEC, and ICIMOD also participated.
The Hindu
14-05-2025
- Business
- The Hindu
Fed tests limits of 'wait and see': McGeever
The Fed has kept interest rates on hold in the face of rising inflation risk, while many of its peers are cutting to cushion the blow from the looming growth slowdown. The Fed's cautious stance runs the risk of leaving Chair Jerome Powell and team behind the curve once again. With its decision last week to leave rates unchanged, the gap between the Fed's and European Central Bank's respective policy rates is the widest in more than two years. U.S. interest rates have not been higher than Canada's since 1997. Powell said last week he and his colleagues could afford to maintain a patient policy stance because the U.S. economy was, on the face of it, still in good shape. Growth and the labor market are strong, and inflation is reasonably close to their 2% target. The costs of waiting were "fairly low", he told reporters after the Fed left policy unchanged. "We can move quickly when appropriate. But there's so much uncertainty ... I can't really give you a time frame on that." The inference here is that any economic damage from delaying the resumption of its easing cycle - remember the Fed cut rates 100 basis points between August and December of last year - will be neutralized by more aggressive moves later. That may be wishful thinking. While Powell is correct that the "hard" economic data, like unemployment and retail sales, remains fairly healthy, "soft" data such as sentiment surveys right now are "about as dark as it gets," according to Moody's chief economist Mark Zandi. And confidence has a direct impact on consumer, business, and investor spending. It's tough to predict exactly how strong that link is right now, as it has weakened since the pandemic. But by the time the Fed detects serious deterioration in the "hard" data, underlying growth has probably already cooled meaningfully, meaning it may be too late to prevent a recession. Exporting inflation To be fair to Powell, the cautious U.S. stance is more reasonable when viewed through an inflation lens. U.S. inflation expectations are significantly higher than those elsewhere as consumers brace for a steep rise in prices later this year due to incoming import tariffs. These expectations may shift following news on Monday of a significant de-escalation in U.S.-Sino trade tensions. But even after trade agreements are reached, America's average effective tariffs will still be the highest in decades. And more than 75% of companies surveyed by the Fed have stated they will be passing cost increases along to consumers. And if the U.S.-China ceasefire doesn't hold, Beijing would almost certainly redirect its shipments of cheap goods previously bound for the U.S. to the rest of the world. All else being equal, that would put upward pressure on inflation in the U.S. while exerting downward pressure in other developed economies. This may largely explain the Fed's more cautious and reactive stance. Excessive unanimity "The Fed suffers from excessive unanimity disease," says Willem Buiter, former rate-setter at the Bank of England. He argues that there is a tendency among central banks to be "excessively gradualist" when it comes to changing rates. If policymakers know their end goal, he says, they should try and get there as quickly as possible without sparking unwanted financial market volatility. The trouble is the Fed doesn't have an idea of what its end goal is because of the fog of uncertainty Trump's trade war has created. Powell refused to definitely say which side of the Fed's employment and inflation dual mandate he and his colleagues consider the bigger risk to the economy. Even in the best of times, setting policy is an uncertain science and vulnerable to the vagaries of Milton Friedman's "long and variable" lag. "You never get it quite right – you're either too fast or too slow," says Steve Dean, Chief Investment Officer at Compound Planning. Investors don't seem to be too worried right now about the policy stasis, especially given the increasingly positive news on the trade war front in recent weeks. Wall Street has fully recovered the ground lost immediately after April 2. And if the trade war fog clears up, the Fed will be in a better position to act, perhaps justifying Powell's "wait and see" approach. But we may need to wait another 90 days to find out. (The opinions expressed here are those of the author, a columnist for Reuters)
Business Recorder
12-05-2025
- Business
- Business Recorder
TSX gains on US-China tariff agreement
Canada's main stock index rose on Monday as the United States and China reached a deal to reduce tariffs, boosting investor optimism and easing fears of an all-out trade war disrupting global markets. The Toronto Stock Exchange's S&P/TSX composite index rose 0.7% at 25,531.01 points, tracking gains in U.S. peers. The index hit over a three-month high earlier in the session. The two biggest economies announced on Monday that the U.S. will cut the extra tariffs it imposed on Chinese imports in April to 30% from 145%, while Chinese duties on U.S. imports will reduce to 10% from 125%. The new measures will be effective for 90 days. 'Canadian markets can benefit from the big easing in trade tensions (as) it shows that the tariff war may be able to get resolved more quickly than people had previously thought', said Colin Cieszynski, chief market strategist at SIA Wealth Management. The U.S.-Sino deal comes days after a U.S.-UK limited trade agreement, easing fears that U.S. President Donald Trump's reciprocal tariffs announced on April 2 would roil global trade and spark a worldwide recession. Back home, Canadian Prime Minister Mark Carney's new cabinet will be sworn in on Tuesday. On TSX, energy stocks gained 3.1%, tracking a jump in oil prices, while information and technology stocks advanced 4.1%. On the flip side, mining stocks fell nearly 4% after safe-haven gold fell more than 2%. Pan American Silver fell 14.1% after the miner plans to acquire MAG Silver Corp in a transaction that values the silver mining company at about $2.1 billion. Conversely, MAG Silver rose 7.2%. Hudbay Minerals jumped 8.8% after the miner beat first-quarter profit and revenue estimates. Shares also rose on the back of higher copper prices.
Yahoo
12-05-2025
- Business
- Yahoo
TSX futures rise as US-China slash tariffs
(Reuters) -Futures for Canada's main stock index surged on Monday, after the United States and China agreed to temporarily slash reciprocal tariffs, bolstering investor optimism and easing fears of an all-out trade war unsettling global markets. June futures on the S&P/TSX index were up 1.34% at 6:14 a.m. ET (1014 GMT). Following weekend talks in Geneva, the two largest economies announced on Monday that the U.S. will reduce the extra tariffs it imposed on Chinese imports in April to 30% from 145%, and Chinese duties on U.S. imports will drop to 10% from 125%. The new measures will be effective for 90 days. The U.S.-Sino deal comes days after the United States and the UK's limited trade agreement that signaled an easing of tariff-related uncertainty. Back home, Canadian Prime Minister Mark Carney's new cabinet will be sworn in on Tuesday. In commodities, oil prices rose more than $2 in Asian trading after the U.S.-China announcement, and base metals prices also increased on Monday. Meanwhile, gold prices dropped 3% to a more than one-week low. In corporate news, Canadian miner Pan American Silver will acquire MAG Silver Corp in a transaction that values the silver mining company at about $2.1 billion. Canada's main stock index added to its weekly gain on Friday, led by energy and metal mining shares, as hopes of easing trade tensions offset evidence about tariff-related impacts on domestic activity. FOR CANADIAN MARKETS NEWS, CLICK ON CODES: TSX market report [.TO] Canadian dollar and bonds report [CAD/] [CA/] Reuters global stocks poll for Canada Canadian markets directory Sign in to access your portfolio
