New yuan-denominated futures contract could hasten the dollar's dethronement, warns Jim Jubak at MSN Money
Throughout the global financial crisis -- even as the problem changed its focus (and name) from the U.S. mortgage-backed securities crisis to the eurozone debt crisis -- the United States could find solace in the strength of the dollar. ...
The dollar isn't without long-term competitive threats, however. The most obvious of those has long been the Chinese renminbi, or yuan. ... But that threat, while acknowledged as real, has always seemed very, very distant.
Well, I think it's time to at least take one "very" off the timeline. China is moving more quickly than expected to turn its currency into a true global alternative. ...
Any real challenge to the dollar from the renminbi isn't going to come tomorrow. But I don't think investors should take the long-term supremacy of the dollar for granted. The likelihood of slippage in the dollar's global role has implications for global stock and bond markets, for U.S. interest rates and for U.S. economic growth rates that you should at least consider in formulating any long-term investment plan.
The latest move -- announced just last week and set to take effect in the third quarter of the year -- is, to me, a bombshell that indicates just how quickly the currency game is changing for the renminbi.
Hong Kong Exchanges and Clearing trades as 388.HK in Hong Kong but is very thinly traded in New York. The company, which owns and operates the stock and futures exchanges in Hong Kong and related clearinghouses, announced plans to launch the first yuan-denominated futures in the third quarter of 2012. ...
Nothing new there. Lots of markets offer futures based on the U.S currency. But this is new and an important change: The contracts will require delivery in dollars by the seller and payment in yuan. In essence, then, the futures allow for the convertibility of dollars and yuan.
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