LOS ANGELES (MarketWatch) — The central bank governors of China and Brazil have agreed in principle to allow trade between the two countries to be settled in their respective currencies, reports said Sunday.
People’s Bank of China Gov. Zhou Xiaochuan and Banco Central do Brazil President Henrique Meirelles met on the sidelines of the Bank for International Settlement’s annual general meeting in Basel and said they would study how to implement the plan, the reports said.
The move would bypass the U.S. dollar, to settle trade invoices in Chinese yuan and Brazilian reals.
The reports follow China’s central bank’s repeated assertion Friday that a new global reserve currency is needed.
“We agreed to start studies on implementing trade in the local currency. We will gradually move away from the dollar as trade between the two countries,” Dow Jones Newswires quoted Meirelles as saying, citing reported remarks in the Estado de Sao Paulo newspaper.
Reuters quoted Zhou as saying a further step was for Brazilian President Luiz Inacio Lula da Silva and Chinese President Hu Jintao to discuss the arrangement, which he said would not necessarily involve a currency swap like those China has in place with other countries.
The PBOC has already arranged six bilateral currency swaps since December with countries including Malaysia, Argentina and Hong Kong, the Reuters report said, allowing those countries’ central banks to lend yuan to their domestic importers to pay for Chinese shipments.
China and Russia said earlier this month they would seek to increase bilateral trade settlements in their national currencies, although some analysts have said such talk may amount to little in terms of immediate change.
{ 11 comments… read them below or add one }
Hi Larry
Have been following your reports for about 3 months, which although predominently oriented to USA investors, are very helpful in getting a good overall view from England. I feel it is not appropriate for me to subscribe to The Foundation Alliance as I am no short term trader, although appreciate the amazing coup and the importance of cycles and timing in general. Would a subscrition to your Real Wealth Report be suitable for a British investor? I would like to buy some Asian, natural resources, possibly some agriculture related shares/ ETFs.
I am retired, have sold my house and have put the proceeds mostly into index linked Gov gilts 2016 and 2020, not knowing what the equivalent of T bills for safety would be over here… (?) together with some Blackrock Gold and General, Blackrock World Mining Trust, Gold Bullion Securities 0% USD (Lyxor GBS) + some separate Goldcorp shares.What percentage of one’s portfolio should now be in gold/gold shares? Silver? I currently have the rest of my money in mostly instant access accounts spread over different Banks just under the £50,000 Gov insured limit. I am worried about the likelihood of the Govenment defaulting and if Index linked Gov gilts are safe and for how long or a bad idea? Where is the safest place for cash here? Would the IMF be in a position to rescue us this time round?
I am renting at low cost by the sea, whilst looking to buy a house at some stage but conserving more capital. I was very interested reading your 29th June ‘How to play The Real Estate Recovery’ article after your 22nd June ‘Wild, Profitable Moves coming…’ article, that you forecasted US real estate prices have bottomed and are on the mend. With a final, devastating stock market crash most probably taking place (after a rally into Sept/Oct), would there not be further jobs losses, more people forced to sell, more houses coming onto the market and subsequently substantial further price declines?
I appreciate you may not be able to give advice in reply to overseas enquires, but if possible any help and views for this side of the pond would be much appreciated.
With many thanks for all your good works.
Samantha
Larry Edelson Reply:
July 8th, 2009 at 7:35 pm
Hi Samantha. Thank you for the kudos. And I must say, you’ve made some moves. Stay liquid and keep most of your money in short-term government securities, The shortest possible. While the yield stinks, as you so smartly already identified, keeping most of your money safe and sounds is the best strategy. As for real estate in the U.K. – I can’t say for certain that it will bottom with U.S. property prices. But I suspect it will.
As for stocks taking another tumble, and the consequences thereof, keep in mind that not every stock market decline has economic repercussions. If that were true, the Crash of 1987 would have ended up causing a depression, and it didn’t even cause a recession. So while the stock market can go lower, that doesn’t not mean real estate prices can’t bottom.
Hey Larry, really anxious to get moving on the Foundation Alliance, wondering when it is starting? Another question relevant to the article above and the probable collapse of the dollar - I am in Ireland, as you primarily recommend US dollar denominated stocks and my base currency is Euro, is there any way I can limit the erosion of profits which I’m sure we WILL be making in the Foundation Alliance by the fall in the dollar versus the euro? I kinda know the answer is no just wondering if there is something I could be doing that I’m unaware of?
Larry Edelson Reply:
July 15th, 2009 at 3:21 pm
Trading in the Foundation Alliance will begin early next week. As for the dollar, the best play is to use an inverse ETF on the dollar, such as UDN, which I recommend in RWR.
Larry, Apparantly you and Sean are not in agreement on gold. You say sell he says buy. What is a reader to do?
Larry Edelson Reply:
July 15th, 2009 at 3:21 pm
We both agree there’s some short-term downside. And we both agree on the long-term upside. So, I’m not sure what you’re referring to.
Thank you very much for replying. I now see more re stock market/real estate prices.
Larry Edelson Reply:
July 15th, 2009 at 3:22 pm
You’re welcome!
Hi Larry…..
After a correction, the market has done exactly what you predicted… back to rallying.
Your outlook on gold was the opposite…
Do you still expect a correction or is this the rally in gold that you were expecting?
Larry Edelson Reply:
July 22nd, 2009 at 10:27 am
$959 is the key short-term level in gold to watch. A close above that means I’m probably wrong on the short-term.
I look forward to your videos, but my computer doesn’t stream them flawlessly. Could you provide a transcript of your presentation similar to what Sean does? I don’t want to miss a word you say. Thanks.
Larry Edelson Reply:
July 22nd, 2009 at 10:28 am
I’ll certainly consider it. However, I do not prepare my comments ahead of time. And given the time zone difference (I’m in Asia), we don’t have the resources at the office in the US to transcribe my comments in time to distribute.
hi larry, i have been following your comments for the past year and i subscribe to rwr. i must say you have been making some good calls on the market. i read all your reports and hope to see more good work from you. cheers jim.
Larry Edelson Reply:
August 5th, 2009 at 5:02 pm
Thank you!
Dear Larry. I am subscribing to your excellent RWreport. As a Uk based investor its a tough call whether to take your recommendations or not but its well worth the subscription for the overall market view.
My problem is that the British pound has appreciated significantly against USD making any investments in USD tend towards the negative. EG I bought physical gold etf LSE: PHAU when gold was 880USD and its still showing a small loss due to the currency appreciation GBP/USD.
My question is - where do you see the GPB going in relation to the USD?. I am surprised it has appreciated as much as it has . The UK economy looks no better than US to me. Your view would be appreciated
Andy
Larry Edelson Reply:
August 5th, 2009 at 5:03 pm
Long term, the pound is headed back down. But regardless, gold should outperform both the pound and the dollar longer-term.
Hi Larry,
I really enjoy your columns.
Since you recommend hedging, we have seen gold go up, then down and seriously up friday. Do you still believe that we should continue to hedge?
Larry Edelson Reply:
August 5th, 2009 at 5:04 pm
Yes, until further notice, or a weekly close in gold above $959.
Larry, I belong to the Foundation Alliance and one question occurred to me today with the latest reco. The reco states that the cycle low for this stock was August 5th. But looking at the chart it appears to be at a relative high point in its price. On the surface this is perplexing to me. Can you explain? Thx -Hank
Larry Edelson Reply:
August 11th, 2009 at 5:59 pm
Good question Hank. The best way to explain it is that cycle lows indicate that selling pressure is abating, and cycle highs, that buying forces are tiring. When looked at that way, then you can better understand that cyclical forces do not dictate price, but rather, who’s gaining the upper hand, so to speak.
Bottom line: If you see a cycle chart suggesting a low is due, and the price action shows a surge to the upside, even if from a higher high, then the cycle is accurately reflecting that buyers are taking control, and selling pressure is abating. The converse is true for a cycle high. – Best, Larry
Hey Larry,
Thanks again for all the help. Your RWR is the best money I have ever spent. Thanks for keeping it very reasonably priced so we can all benefit from it.
I just read your article in Money and Markets on the “Significant Turning Points in Key Markets”. Great areIt sounds like you are using this tool along with your own methods. I have considered subscribing to this tool. Is it simple enough for a novice to use? Is there a reason for me to try and follow it when I am already following your RWR recommendations?
According to your article you are expecting a decline in equities in late July or August. Does this change your view that we could see 10k on the Dow before the next major leg down? I appreciate your views. They have saved me a bundle. Thanks again.
Stacy (RWR subscriber)