According to the International Monetary Fund, the total amount of euros in the currency reserves of developing countries decreased 2012 year before 24% (676,6 billion euros). This is the lowest since 2009. Last year, the central banks of these countries sold securities denominated in European currency to 44,8 billion. Against this background, investments in dollar assets are growing. The central banks of the BRICS countries, for example, for 2012 a year invested about $ 156 billion in US securities, which corresponds to approximately 120 billion euros.
At the very beginning of the Cyprus crisis, the investment fund PIMCO, which has assets of more than 2 trillion. Doll., reduced their investments in eurocurrency. The executive director of the organization, Saumil Parikia, stated that he considers the decision taken (at that time) by the Eurogroup to impose a tax on deposits in exchange for financial assistance not just a mistake, but a kind of recognition that the euro is far from perfect as a key global currency. And Parikia is not alone in her skepticism. His opinion is shared by the central banks of developing countries that are getting rid of the euro. According to the International Monetary Fund, in 2012, they sold a total of 45 billion euros. The favorite is the US dollar, whose share is invariably maintained at the level of 60%.
Well-known agency "Standard & Poor's" downgraded forecast for the fall of eurozone GDP by 2013 to 0,5%. Previously, it was a decrease in 0,1%. But due to the difficult financial situation, the scale of decline may increase fivefold. The notorious Cyprus with its beginning "haircut" of deposits is achieving the situation. And not only Cyprus. The fall of the banking system of Cyprus, strengthening crises in Greece, Spain and other "peripheral" countries of the EU, it seems, is about to finish off the single European currency. Eurozone recessions cannot be avoided. Decisions like Cypriot are now feared in Spain. In Greece. At any moment, the soft help of a “sick” economy can be replaced by surgery - monetary expropriation.
It would seem that the time has come to perk up the dollar declining in recent years.
Jesus Fernandez-Villaverde, Tano Santos and Luis Garicano from The National Bureau of Economic Research, that is, the National Bureau of Economic Research, wrote an extensive financial composition on the crisis in the eurozone. It is entirely devoted to the main culprit in the crisis in the eurozone: the single currency euro. Everything that used to be bad in the economy of Greece or Portugal, with the introduction of the euro in 1999, has become much worse: debts have grown, bubbles have become inflated, dependence on EU saving funds has grown. In the past, “peripheral” European countries used devaluation to recover from the effects of adverse business cycles, which, however, did not improve the basic volatility of their economies. With the euro, there has been a deterioration in the sense that it has become impossible to apply the devaluation policy. In short, the euro ruined everything.
Here it should be noted that the National Bureau of Economic Research is based in Massachusetts (this is in the USA) and that two of its three authors are Americans (the third is British). Agree, for the glory of the dollar was baked and not such reports.
But why scourge the second key currency of the world, if everything is brilliant from the first? Probably, the Massachusetts PR move is exactly designed to polish something that does not shine.
The fact is that the use of the dollar in international calculations has already been called by analysts as “a bad habit.” And it is customary to get rid of bad habits. Well, many get rid of. It is quite successful. Without any signs of "disaster".
Today, five of the ten leading economies in the world (along with several others) already report Mixednews.ru with reference to the Activist Post, they do not use the dollar as an intermediary currency when trading.
“Australia, being 12 the world's largest economy, has joined the growing list of countries that have agreed to abandon the dollar in bilateral trade with China. China, being the second largest economy in the world after the USA, also has similar agreements with Japan (3 place), Brazil (6 place), India (9 place) and Russia (10 place). ”
Moreover, the other day the BRICS countries agreed to create their own development bank, which will compete with the IMF. This suggests that it is created for activities in a “post-dollar” world.
Marin Katus from Casey Research recalls that the bulk of the value of a dollar comes from a bond with the oil industry: if the dollar-oil monopoly orders to live a long time, the same thing happens with the value of a dollar. And there is one result that can be predicted definitely: gold will be more expensive. Uncertainty around paper money always bodes well for gold.
Analyst Julia Pentkovskaya, whose point of view leads Aydar Ermekov (Express K) believes that talking about a catastrophe that supposedly erupts after the collapse of the dollar is groundless. The collapse of the “American” is inevitable: it is a fake. Indeed, in the US there is no equivalent than to measure it, the expert notes. Therefore, it is no more than a candy wrapper.
And now fresh "golden" news.
According to IA "Finmarket", last year (only last year!), the central banks of different countries bought almost 15 millions of troy ounces of gold. Against others, the Russian Central Bank and the People’s Bank of China stood out. The agency "Bloomberg" even called Russia "the main buyer of gold of the decade." The reason for interest in gold in Russia and China is common, according to Finmarket analysts: the fall or even the collapse of the dollar is predetermined, and gold will not allow huge reserves of regulators to depreciate.
It can be said that Russia turned "black gold" into the usual: the Central Bank bought 10 tons of gold in 570 for years. If we assume that a troy ounce is 165 $, then the purchase price is approximately 30 billion $.
Jeff Clark from Casey Research believes that the first is the People’s Bank of China, which buys more gold, but does not tell anyone about it.
According to official estimates, the NBK owns 1054 tons of gold. According to Bloomberg, the Central Bank of China bought 425 tons of gold over the past ten years. In December, gold imports from Hong Kong broke record-breaking 109,8 tons. Imports for the entire 2012 of the year also reached record-breaking 572,5 tons. Total imports since the beginning of the 2001 year reached 1352 tons. In addition, China is the largest gold producer in the world. From 2001, imports plus mining amounted to 4793 tons of gold. According to economist and investor James Rickards, China has accumulated 2-3 thousands of tons of gold reserves. If this estimate is correct, then with 2009, the country has doubled its reserves. And the next cataclysm in the gold market will occur when China announces its real reserves. This will lead to an inevitable jump in prices for the yellow metal.
By the way, in absolute terms, Turkey has become the leader in gold purchases - with 5,2 million troy ounces. The country increased its gold reserves by 84,1%, to 11,56 million troy ounces. The Russian Central Bank bought 2,4 million troy ounces, increasing reserves by 8,5% (to 30,79 million troy ounces). Brazil bought 1,08 million ounces, doubling its reserves. Total central banks bought 15,2 million troy ounces of gold, and if you subtract sales from this amount, the net purchase will be 14,8 million ounces. This data is based on official reports of central banks and governments and does not include China and several other countries that have not provided relevant reporting.
The net growth in gold reserves in 2012 was 17% - more than the previous record increase recorded in 2011. Central banks even ignore the price dynamics, buying up rising gold.
Therefore, it is not so important who is the first in the gold race. The trend is important.
Finmarket analysts answered the question why central banks are “desperately” buying the yellow metal. Russian officials explicitly stated that gold would ensure the country's sovereignty if something happens to the dollar or the euro. And comrade Hu Jintao, the former head of China, said that the monetary system operating in the world is a “product of the past.” As for the leaders of developing countries, they declare the injustice of the dollar system and currency wars.
So far, the share of gold in the reserves of Russia is about 9,5%, and in the reserves of China - about 2%. But the central banks of the Russian Federation and China continue to buy gold. According to the forecast given on Finmarket, in 2015, gold will rise in price to 7000 dollars per troy ounce.
Finally, that planned cunning people from BRICS, encroaching on the holy of holies. Here is the most recent and most impressive example - the agreement between Brazil and China.
Galina Akimova ("Versions .com"), referring to the words of one of the popular bloggers, calls the use of the dollar in international calculations "a bad habit." At the summit of the BRICS countries in South Africa, the main news was the transition to national currencies. China and Brazil have completely switched to converting real to yuan.
A week and a half ago, the People’s Bank of China and the Central Bank of Brazil concluded an agreement on currency swaps of 190 billion yuan / 60 billion Brazilian reals (more than 30 billion dollars). From now on, businessmen of the two countries will be able to trade among themselves in the indicated volumes without the use of the dollar and without recalculating prices into the American currency.
However, while the new settlement system (the term of the agreement is three years) is working in trial mode. A swap of 30 billion dollars is, in essence, a bit. After all, the volume of bilateral trade between the Middle Kingdom and Brazil in 2012 year exceeded 75 billion.
However, the first step is the hardest. Analysts have no doubt that after running in a new mechanism, China will sign swap agreements with other BRICS countries.
All this, however, only suggests the correct idea of China moving its yuan in the world. Not rejection of the dollar, and the emergence of such a new key currency - the yuan. Along with the euro and the dollar. The interests of BRICS China is unlikely to take into account, but their own - necessarily. But then he and China.
As economist Kimberly Amadeo writes, the lead column on About.comTwo conditions can lead to a fall in the dollar: first, the weakness of this currency; secondly, a viable alternative currency should emerge. In addition, something like a crash triggering event should happen.
The first condition exists now. The dollar lost in weight 54,7% against the euro in the period 2002-2012. The fact is that during this time, US debt has almost tripled, with 5,9 trillion. $ to 15 trillion $. The government can continue to depreciate its dollar - for the sake of profitable debt repayment.
Another question: where is the viable alternative to the dollar? Now the dollar is used in 43% of all cross-border transactions, writes K. Amadeo. As reserves of central banks, the dollar is 61%. The next most popular currency in the world is the euro (less than 30% reserves). The eurozone crisis has weakened the euro as a viable alternative to the dollar.
Here we come to China. And what? Yes, China and some other countries have arguments in favor of a new world currency. But it will be very difficult to replace the dollar in "mass order". A “global” determination will be required, the analyst says, and all this will not happen immediately.
Further about China. He owns more than a trillion dollars in US Treasury bonds. Why does he need it? Beijing pegs its yuan to the dollar, which allows it to keep US export prices relatively low. Japan is not lagging behind it either: it owns more than 800 billion dollars in treasury bonds and also maintains a low yen exchange rate to stimulate exports to the United States. This country is trying to get out of the 15-year deflationary cycle.
However, even if China, Japan and other large holders of dollar-denominated securities can throw stocks of treasury bonds into the secondary market, which can cause panic leading to the collapse of the dollar, they will not do this. Why?
Everything is simple. The economies of Japan and China are dependent on American consumers. They know, reminds Kimberly Amadeo, that if they sell their dollars, their products in the USA will rise in price, and their economy will suffer. Now they are still interested in keeping their dollar reserves. Yes, China and Japan are selling more and more products to other Asian countries, which are gradually becoming richer, but, nevertheless, the USA is still the most attractive market in the world.
Thus, the economist concludes, it is highly unlikely that the dollar will collapse. Any of the countries that are able to provoke this collapse (China, Japan and other foreign holders of dollars) do not want this to happen. It is not in their interest. Instead of collapsing, the dollar is likely to continue to fall gradually, as countries such as China or Japan find and develop other markets.
Here is such a plot. Having a little understood his intricacies, you realize that no one wants to “blame” the dollar, and the United States understands this very well. At the same time, everyone is insured against the possible fall of the dollar, as the Fed continues to “quantitative easing”, which is similar to insane money printing, and the US debt is growing rapidly, approaching 17 trillions of dollars. All those who have a lot of dollars in foreign currency reserves are insured - the same China, the same Russia. How are they insured? Buy gold. It is more expensive according to market laws. But the central banks are still buying it, and it is even more expensive. Meanwhile, the US national debt is growing, and the dollar is depreciating noticeably, which partly solves the debt problem of the US government. A blessing in disguise, as they say.
What can I give a forecast? In the coming years, the dollar will survive, but China will do everything possible so that the yuan will play the role of a new key currency. However, to strive to completely oust the dollar China - God forbid - will not. In Beijing, no fools live. First, such repression is fraught with the collapse of the Chinese economy, largely tied to the United States; secondly, it is beneficial for China to gradually weaken the yuan in order to gain more from the trade with the same United States: to get more yuan for the dollars gained. The output of the yuan in major key currencies will lead to the opposite - the strengthening of the national currency of China. Someday, of course, the Chinese will need it. Someday - but not today. Today they only set the stage for this.
Observed and translated by Oleg Chuvakin
- especially for topwar.ru
- especially for topwar.ru