tag:blogger.com,1999:blog-5848640164815342479.post387170648298095793..comments2024-03-18T16:01:13.871-07:00Comments on Haq's Musings: Will Russia Sanctions Accelerate Inflation, Devalue US Dollar and Strengthen Chinese Yuan? Riaz Haqhttp://www.blogger.com/profile/00522781692886598586noreply@blogger.comBlogger54125tag:blogger.com,1999:blog-5848640164815342479.post-48708504472980799642024-01-31T14:22:47.056-08:002024-01-31T14:22:47.056-08:00The era of US dollar dominance is 'finished,&#...The era of US dollar dominance is 'finished,' says Wall Street veteran who just retired after 54 years<br /><br /><br />https://markets.businessinsider.com/news/currencies/dick-bove-banks-usd-dollar-dominance-crypto-china-trade-outsourcing-2024-1<br /><br />"The dollar is finished as the world's reserve currency," Dick Bove, who retired as a financial analyst after 54 years this month, told The New York Times. Bove, 83, predicted that China's economy would surpass America's in size.<br /><br />The dollar's reign as the world's reserve currency is nearly over, Dick Bove says.<br /><br />The newly retired bank analyst blamed corporate offshoring and flagged the threat posed by China.<br /><br />Bove highlighted the de-dollarization trend and said other analysts are too bought in to admit it.<br /><br />The US dollar has been the lifeblood of global finance and trade since World War II — but one Wall Street veteran thinks the end of that era is nigh.<br /><br />"The dollar is finished as the world's reserve currency," Dick Bove, who retired as a financial analyst after 54 years this month, told The New York Times.<br /><br />Bove, 83, predicted that China's economy would surpass America's in size. He blamed the outsourcing of US manufacturing to other countries, arguing that trend has given other countries more control of international production, the global economy, and worldwide money flows.<br /><br />He also suggested that cryptocurrencies such as bitcoin could help fill the void left by the dollar's shrinking influence.<br /><br />Dollar-denominated assets make up nearly 60% of international reserves, per the International Monetary Fund. However, several countries are embracing "de-dollarization" — working to erode dollar dominance — especially after the US took advantage of Russia's reliance on the greenback to levy sanctions against it following its invasion of Ukraine in 2022.<br /><br />Nations ranging from Brazil and Argentina to India and Bangladesh are exploring the use of backup currencies and assets, such as the Chinese yuan and bitcoin, for trade and payments.<br /><br />Several governments have blasted the excessive influence of US monetary policy on other economies and currencies, the dollar's strength for pricing out poor countries from imports, and the diminishing need for a petrodollar now the US has achieved energy independence through domestic shale oil and green energy production.<br /><br />Bove, who worked at 17 brokerages during his career, told the Times that analysts who aren't forecasting dollar doom are simply "monks praying to money" who are unwilling to bite the hand that feeds them: the traditional financial system.Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-2751818904383615102023-11-27T11:03:05.122-08:002023-11-27T11:03:05.122-08:00Arnaud Bertrand
@RnaudBertrand
SCMP editorial: htt...Arnaud Bertrand<br />@RnaudBertrand<br />SCMP editorial: https://scmp.com/comment/opinion/article/3242880/dollar-still-king-how-much-longer<br /><br />"The increasingly close relationship between China and Saudi Arabia has taken another significant step forward. The central banks of both countries have agreed on their first currency swap...<br /><br />In the longer term, it augurs a petroyuan future as the two countries are already the most important trading partners of each other.<br /><br />In a global political economy long dominated by the petrodollar, this could be the beginning of a seismic shift."<br /><br /><br />https://x.com/RnaudBertrand/status/1728923824996139481?s=20<br /><br />---------------------<br /><br />The increasingly close relationship between China and Saudi Arabia has taken another significant step forward. The central banks of both countries have agreed on their first currency swap worth a maximum of 50 billion yuan (HK$55 billion) over the next three years.<br /><br />In immediate terms, the pact will foster bilateral commerce denominated in both the yuan and the riyal. In the longer term, it augurs a petroyuan future as the two countries are already the most important trading partners of each other.<br /><br />In a global political economy long dominated by the petrodollar, this could be the beginning of a seismic shift. It has been a very long time coming.<br /><br />Almost a year ago, President Xi Jinping made a historic visit to Riyadh, followed by Hong Kong Chief Executive John Lee Ka-chiu in February. A flurry of deals followed.<br /><br /><br />The Shanghai Stock Exchange and its Saudi counterpart have started collaboration on cross-listings, including exchange-traded funds (ETFs), financial technology (fintech), environmental, social and governance (ESG) and data exchange.<br /><br />China, Saudi Arabia central banks sign currency swap accord to foster trade<br />21 Nov 2023<br />The People’s Bank of China (PBOC) building in Beijing on Tuesday, April 18, 2023. Photo: Bloomberg<br />The Hong Kong Monetary Authority, the city’s de facto central bank, and the Saudi Central Bank have enhanced ties covering the latest technologies in regulatory supervision and monitoring, and in financial fields such as tokenisation and new payment systems.<br /><br />However, the latest currency swap pact will be the most important. It means trade can be conducted in local currencies, instead of defaulting to the US dollar. This may be seen as a challenge to US dollar dominance. Perhaps in the longer term, it is. But there is a good economic reason.<br /><br />The current US federal interest rate of 5-plus per cent has pushed the dollar to historical levels against most other currencies, making trade denominated in the dollar more expensive.<br /><br />There are obvious advantages for two big trade partners like China and Saudi Arabia to be able to utilise a local-currency option, which will help relieve pressures from having to trade in a more expensive currency.<br /><br />Global “de-dollarisation” may take a while yet, but the trend already reflects cracks in a global economy long used to US currency settlements.<br /><br />The yuan may or may not pose a challenge to dollar hegemony, but its internationalisation continues apace – to the benefit of both the Chinese and global economies.Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-16728545185671822052023-08-07T07:10:22.509-07:002023-08-07T07:10:22.509-07:00#European companies suffer €100 billion hit from #...#European companies suffer €100 billion hit from #Russia operations. Losses concentrated in #energy sector. #Germany is the biggest loser. #UkraineWar https://www.ft.com/content/c4ea72b4-4b02-4ee9-b34c-0fac4a4033f5<br />Energy and utility groups have reported more than half the combined losses, according to FT analysis of direct impact of the Ukraine war<br /><br /><br />Europe’s biggest companies have suffered at least €100bn in direct losses from their operations in Russia since President Vladimir Putin’s full-scale invasion of Ukraine last year, according to analysis by the Financial Times.<br /><br />A survey of 600 European groups’ annual reports and 2023 financial statements shows that 176 companies have recorded asset impairments, foreign exchange-related charges and other one-off expenses as a result of the sale, closure or reduction of Russian businesses.<br /><br />The aggregate figure does not include the war’s indirect macroeconomic impacts such as higher energy and commodities costs. The war has also delivered a profit boost for oil and gas groups and defence companies.<br /><br />Moscow’s decision to seize control of the Russian businesses of gas importers Fortum and Uniper in April, followed by the expropriation of Danone and Carlsberg last month, suggests more pain lies ahead, according to analysts.<br /><br />More than 50 per cent of the 1,871 European-owned entities in Russia before the war are still operating in the country, according to data compiled by the Kyiv School of Economics. European companies still present in Russia include Italy’s UniCredit, Austria’s Raiffeisen, Switzerland’s Nestlé and the UK’s Unilever.<br /><br />“Even if a company lost a lot of money leaving Russia, those who stay risk much bigger losses,” said Nabi Abdullaev, partner at strategic consultancy Control Risks. “It turns out that cut and run was the best strategy for companies deciding what to do at the start of the war. The faster you left, the lower your loss.”<br /><br /><br /><br />The heaviest costs of withdrawal are concentrated in a few exposed sectors. Those with the biggest writedowns and charges are oil and gas groups, where three companies alone — BP, Shell and TotalEnergies — reported combined charges of €40.6bn. The losses were far outweighed by higher oil and gas prices, which helped these groups report bumper aggregate profits of about €95bn ($104bn) last year. Defence companies’ shares have been buoyed by the conflict.<br /><br /><br />Utilities took a direct hit of €14.7bn, while industrial companies, including carmakers, have suffered a €13.6bn blow. Financial companies including banks, insurers and investment firms, have recorded €17.5bn in writedowns and other charges.<br /><br />Simon Evenett, economics professor at University of St Gallen, said: “You have a small number of companies which have taken a big hit. Once you get away from big ticket charges, the average writedown is probably fairly manageable given the limited Russian footprint.”<br /><br />Looking at global investment flows into Russia, “even if Europeans were the only investors there, which they are not, the country would account for just 3.5 per cent of their total outward investments”, he said.<br /><br /><br />BP reported a $25.5bn charge, announcing three days after the invasion that it would sell its 19.75 per cent stake in state-owned oil group Rosneft.<br /><br />It took TotalEnergies longer to report a total cost of $14.8bn. The French energy group has yet to write down its 20 per cent stake in the Yamal LNG project. Shell took a $4.1bn charge, while Norwegian oil and gas group Equinor and Austria’s OMV have reported €1bn and €2.5bn respectively.<br /><br />German group Wintershall Dea in January said the Kremlin’s expropriation of its Russia business had wiped €2bn of cash from its bank accounts. In turn Wintershall’s owner BASF wrote down its stake in the energy explorer by €6.5bn.<br /><br />Uniper, which was bailed out by the German state last year, booked €5.7bn in impairments, while Finland’s Fortum took a €5.3bn hit.<br /><br /><br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-28210881066973974792023-07-19T16:36:03.925-07:002023-07-19T16:36:03.925-07:00Why Is Ukraine's Foreign Minister Visiting Pak...Why Is Ukraine's Foreign Minister Visiting Pakistan?<br /><br /><br />https://globelynews.com/europe/ukraine-foreign-minister-visit-pakistan/<br /><br /><br />Ukraine Arms Likely on Agenda<br />Pakistan, like many non-Western countries, says it’s adopted a neutral position in the Russia-Ukraine war. But, compared to other countries in the Global South, it’s an outlier in one big way: it’s been providing Ukraine with weapons. Nothing fancy — mainly artillery shells — but Kyiv is burning through massive amounts of firepower and will take ammunition from wherever it can get it. (The U.S. decision to provide Ukraine with cluster bombs makes the coalition’s desperation clear.)<br /><br />Kuleba — who may be joined by Defense Minister Oleksii Reznikov — could ask for more arms during his visit, though that won’t be mentioned in any readout or local press reports.<br /><br />The reason? Pakistan has yet to publicly acknowledge that it’s been providing Ukraine with arms. The weapons transfers have been covert, taking place indirectly through other European partners. The behind-the-scenes relationship was, however, acknowledged months ago by a European Union (EU) official in a television interview.<br /><br />India AWOL on Ukraine<br />It does not appear that Kuleba will stop by New Delhi on this trip. Strikingly, Ukraine’s diplomatic engagement with India is taking place at a lower level. Emine Dzhaparova, the Ukrainian first deputy foreign minister, visited New Delhi in April. And last week, a mid-level Indian diplomat paid a visit to Ukraine.<br /><br />India, whose leader Prime Minister Narendra Modi has made recent state visits to France and the United States — continues to remain an ally of Russia and has emerged as a major importer of Russian oil.<br /><br />India is using its leadership of the G-20 this year to pronounce its rise as a global power. But it’s been absent when it comes to the biggest war Europe has seen since World War Two, seeing it as a sideshow. Indian Foreign Minister S. Jaishankar has been dismissive of the Ukraine war, calling it one of “Europe’s problems.”<br /><br />For his part, Kuleba has harshly criticized New Delhi for its import of Russian oil. He said last August, “Every barrel of Russian crude oil delivered to India has a good portion of Ukrainian blood in it.” Months later, he said India was “benefit[ting] from our suffering,” and called on New Delhi to play a more diplomatic role in the war.<br /><br />Insurance for the Pakistan Army<br />Though Kuleba’s visit to Islamabad was requested by Kyiv, it is important for Pakistan — especially its powerful army, which is behind the secret provision of arms to Ukraine. The Pakistan Army has been given a cold shoulder by Washington in the aftermath of the U.S. withdrawal from Afghanistan. By arming Ukraine, Pakistan is sending a message to Western powers courting India: we can still be useful to you.<br /><br />The Pakistan Army is also under criticism domestically and internationally for its crackdown on the party of ex-cricketer Imran Khan.<br /><br />Pakistani intelligence services have been forcing defections from Khan’s Pakistan Tehreek-e Insaf (PTI) party after violence targeting military installations that followed the violent arrest of the ex-cricketer by paramilitary forces on May 9.<br /><br />This month, EU Ambassador to Pakistan Riina Kionka said that “the crackdown on PTI and supporters in the aftermath of May 9th is certainly something that we’re paying a lot of attention to.” Khan and others who remain with PTI could be tried under military courts.<br /><br />-----------<br /><br />https://en.wikipedia.org/wiki/Pakistan–Ukraine_relations<br /><br />Dr. Riina Kionka, European Union's ambassador to Pakistan, in an interview with local media in Pakistan on 21 February 2023 said that Pakistan has been helping Ukraine in its protracted conflict with Russia by sending military and humanitarian aid.[24]<br /><br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-40902622523179622182023-05-16T16:31:41.350-07:002023-05-16T16:31:41.350-07:00Top 10 Countries that Export the Most Goods and Se...Top 10 Countries that Export the Most Goods and Services (Current US$ millions - World Bank 2020)<br /><br />https://worldpopulationreview.com/country-rankings/exports-by-country<br /><br />Rank Country Exports (Current US$)<br />1 China $2,723,250.43<br />2 United States $2,123,410.00<br />3 Germany $1,669,993.51<br />4 Japan $785,365.75<br />5 United Kingdom $770,478.62<br />6 France $733,165.40<br />7 Netherlands $711,504.80<br />8 Hong Kong (China SAR) $612,566.52<br />9 Singapore $599,216.28<br />10 South Korea $596,945.20<br /><br />Profiles of the world's largest exporters<br />1. China<br />Aside from the European Union (which is a collective of many countries), China is the world’s largest exporter. In 2020, China exported an estimated $2.72 trillion worth of goods and services, primarily electronic equipment and machinery such as broadcast equipment, computers, integrated circuits, office machine parts, and telephones. In 2018, China’s exports made up about 10.78% of the global total.<br /><br />2. United States<br /><br />The U.S. is the second-largest exporter in the world, with an estimated $2.12 trillion in exports for 2020. The largest exports of the U.S. are crude and refined petroleum; integrated circuits; pharmaceuticals and medical instruments; and aircraft including planes, spacecraft, and helicopters as well as their replacement parts. One of the reasons that the United States lags behind China in exports is the cost of labor. Many goods cannot be produced, manufactured, or assembled in the U.S. for a price comparable to that in China.<br /><br />3. Germany<br />Having exported an estimated $1.67 trillion worth of goods and services in 2020, Germany is the world’s third-largest exporter. As one of the most technologically advanced countries in the world, Germany’s main exports include automobiles (BMW, Mercedes-Benz, Porsche, Audi, Volkswagen), pharmaceuticals (Bayer), aircraft, machinery, electronics, and chemicals. Germany is the third of three countries to have exports exceeding $1 trillion, behind only China and the United States.<br /><br />4. Japan<br />Japan’s exports for 2020 were valued at an estimated $785.4 billion. Japan’s major exports include automobiles (Toyota, Honda, Nissan, Mazda, Suzuki, more) and automobile parts, integrated circuits and electronic devices (Nintendo, Panasonic, Sony, and many more). Japan's largest export customers are China, the United States, South Korea, Taiwan, and Hong Kong.<br /><br />5. United Kingdom<br /><br />The United Kingdom ranked as the fifth-highest exporter in the world in terms of dollar value in 2020, shipping an estimated $770.5 billion in goods and services to international customers. The U.K.'s top exports include cars (Bentley, Jaguar, Mini, Rolls-Royce, more), gas turbines, gold, medicines, hard liquor, antiques, and crude petroleum (which is often first imported from Norway, then exported to the rest of Europe, as well as China and South Korea).<br /><br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-38668892982545174902023-05-09T19:06:47.495-07:002023-05-09T19:06:47.495-07:00#Pakistan joins global trend in dumping #US #Dolla...#Pakistan joins global trend in dumping #US #Dollar for #Chinese #yuan. The first shipment of over 750,000 barrels of #Russian #oil is expected to arrive in June, with Pakistan agreeing to a discounted per-barrel price of around $50–$52. #energy<br />https://www.cryptopolitan.com/pakistan-joins-in-dumping-usd-for-yuan/<br /><br /><br />Pakistan decides to purchase discounted Russian oil using the Chinese yuan, joining the global trend of de-dollarization.<br />The first shipment of over 750,000 barrels is expected to arrive in June, with Pakistan agreeing to a discounted per-barrel price of around $50–$52.<br />The decision follows sanctions imposed on Russia by the EU, G7, and their allies in response to Russia's invasion of Ukraine.<br />In a move reflecting the global shift towards de-dollarization, Pakistan has decided to purchase discounted Russian oil using the Chinese yuan.<br /><br />As part of the BRICS economic bloc’s efforts to conduct international trade in currencies other than the US dollar, Pakistan’s decision signals another transaction conducted using an alternative currency.<br /><br />Alternative payment for Pakistan amid sanctions<br />Pakistan is set to pay for Russian oil with the Chinese yuan, as local media report that the first cargo of over 750,000 barrels is expected to arrive in June.<br /><br />Although the exact amount and mode of payment have not been disclosed, sources reveal that Pakistan has agreed to a discounted per-barrel price of around $50–$52, significantly lower than the G7 price cap on Russian oil of $60 per barrel.<br /><br />This development follows sanctions imposed on Russia by the EU, G7, and their allies, including a ban on seaborne oil exports and a price cap on Russian oil.<br /><br />These measures were in response to Russia’s invasion of Ukraine and aimed to distance the nation from the West. Amid the focus on the Chinese yuan, talks of a BRICS trading currency are expected to progress at the annual BRICS summit.<br /><br />The growing influence of the Chinese Yuan<br />With the first shipment of 750,000 barrels anticipated to dock in June, Pakistan plans to pay for Russian crude oil using Chinese yuan. The Bank of China is expected to facilitate the transaction.<br /><br />However, the mode of payment and the discount offered to Pakistan remain undisclosed, as publicizing such information is not considered beneficial for either party.<br /><br />An official from Pakistan’s Ministry of Energy stated that Russia would supply URAL crude in the test cargo, which Pakistan Refinery Limited (PRL) will likely refine.<br /><br />Meanwhile, other sources report that Pakistan has agreed to a per-barrel price of around $50-52, lower than the G7 price cap on Russian oil of $60 per barrel.<br /><br />The decision to use the Chinese yuan for this transaction illustrates the currency’s growing acceptance in international trade, as well as concerns about the US abusing its dollar hegemony through sanctions.<br /><br />The yuan’s stability, China’s economic strength, and its large consumer market make it an increasingly reliable choice for international settlements.<br /><br />In recent months, several countries have expressed their inclination to settle trade deals in the yuan instead of the US dollar. Iraq’s central bank announced in February that it would trade with China using the yuan.<br /><br />Argentina followed suit in April, declaring that it would start paying for Chinese imports in yuan rather than in US dollars.<br /><br />According to data from multiple sources, the yuan became the most widely used currency for cross-border transactions in China in March, overtaking the dollar for the first time.<br /><br />The yuan was used in 48.4 percent of all cross-border transactions, while the dollar’s share declined to 46.7 percent from 48.6 percent a month earlier.<br /><br />This shift towards the Chinese yuan can be attributed to China’s ongoing efforts to open its financial sector, making it easier for global investors to participate in its domestic financial market.<br /><br />As the yuan’s role in global payment and settlement, foreign exchange reserves, and investment and financing expands, the de-dollarization trend is expected to continue.<br /><br /><br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-76287810595443496122023-05-02T18:49:43.358-07:002023-05-02T18:49:43.358-07:00Speaking at ET Awards for Corporate Excellence 202...Speaking at ET Awards for Corporate Excellence 2023 last week, the veteran banker had said, “I genuinely feel that the biggest financial terrorist in the world is the US dollar." Telling why he feels this way, the Kotak Mahindra Bank chief stated that all our money is in nostro accounts and somebody in the US can say<br /><br />https://youtu.be/QXC9BsiRLlU<br /><br />-----------------<br /><br />'I'd like to correct': Uday Kotak clarifies ‘financial terrorist’ statement about US dollar<br /><br />In the March quarter, Kotak Mahindra Bank witnessed a notable increase in its standalone net profit, which rose by 26.3 per cent year-on-year to reach Rs 3,495.6 crore<br /><br />https://www.businesstoday.in/industry/banks/story/uday-kotak-clarifies-financial-terrorist-statement-on-us-dollar-as-reserve-currency-379470-2023-04-30<br /><br />Uday Kotak, the CEO of Kotak Mahindra Bank, has provided further clarification on his recent statement about the US dollar being the "biggest financial terrorist in the world." Kotak clarified in a tweet that his statement about the "financial terrorist" was not specifically aimed at the US dollar but rather at the disproportionate power that any reserve currency holds.<br /><br />According to Kotak, the US dollar's status as a reserve currency gives it an unfair advantage in controlling global transactions, which could potentially result in other countries becoming overly reliant on it. He further elaborated that a reserve currency wields significant power, including the ability to dictate whether money in nostro accounts can be withdrawn, which can have a profound impact on the global financial landscape. Kotak believes that the world is actively searching for an alternative reserve currency and posits that India has the potential to promote the Indian Rupee as a strong contender to fill this role on the global stage. By doing so, he suggested that India can reduce its dependency on the US dollar and promote a more diversified, stable global financial system.<br /><br />He clarified his previous statement in a tweet saying, "In a recent discussion on the US dollar, I inadvertently used words 'financial terrorist,' which I would like to correct. What I meant was that a reserve currency has disproportionate power, whether it is nostro account, 500 bps rate increase, or emerging countries holding $ for liquidity."<br /><br />In the March quarter, Kotak Mahindra Bank - the second-largest private bank in India - witnessed a notable increase in its standalone net profit, which rose by 26.3 per cent year-on-year to reach Rs 3,495.6 crore. The bank's net interest income (NII) also saw a significant jump of 35 per cent YoY to reach Rs 6,102.6 crore.<br /><br />--------------<br /><br />A nostro account refers to an account that a bank holds in a foreign currency in another bank. Nostros, a term derived from the Latin word for "ours," are frequently used to facilitate foreign exchange and trade transactions.<br /><br />https://www.investopedia.com/terms/n/nostroaccount.asp#:~:text=A%20nostro%20account%20refers%20to,foreign%20exchange%20and%20trade%20transactions.<br /><br /><br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-44424851826722683782023-04-26T20:37:37.558-07:002023-04-26T20:37:37.558-07:00Genevieve Roch-Decter, CFA
@GRDecter
Chinese Yuan ...Genevieve Roch-Decter, CFA<br />@GRDecter<br />Chinese Yuan overtakes US dollar as most-used currency in China's cross-border transactions for the first time in history.<br /><br />Yuan-share rose to a record high of 48%, UP from nearly zero in 2010.<br /><br />U.S-share declined to 47%, DOWN from 83% over the same period.<br /><br />Wow.<br /><br />https://twitter.com/GRDecter/status/1651280199034585089?s=20<br /><br /><br /><br />The dollar falls behind the yuan for the first time in Chinese cross-border transactions<br /><br /><br />https://markets.businessinsider.com/news/currencies/dedollarization-dollar-dominance-yuan-chinese-cross-border-transactions-usd-renminbi-2023-4<br /><br />The yuan overtook the dollar as the most used currency for Chinese cross-border transactions.<br /><br />Its use in cross-border payments and receipts increased to 48% versus 47% for the dollar.<br /><br />China is pursuing further use of the yuan to avoid currency mismatches in trade.<br /><br />For the first time ever, the yuan has eclipsed the US dollar as the most used currency for Chinese cross-border transactions.<br /><br />The yuan's use in cross-border payments and receipts rose to 48.4% at the end of March while the dollar's share slid to 46.7%, according to a Reuters calculation of data from China's State Administration of Foreign Exchange.<br /><br /><br />In 2010, the yuan's share was nearly 0% while the dollar's was 83%, according to Bloomberg. The reversal comes amid China's efforts to empower the yuan, also known as the renminbi, in trade and capital markets.<br /><br />Meanwhile, Chinese bonds have seen greater inflows recently, alongside outflow increases to Hong Kong stocks.<br /><br />Increased reliance on the yuan will reduce any risks of currency mismatches. For this reason, China's State Council is encouraging expansions in the renminbi's use for cross-border transactions.<br /><br />But the dollar remains dominant beyond China's borders. For example, the yuan's share of global currency transactions for trade finance was just 4.5% in March compared to 83.7% for the dollar, per Reuters.<br /><br /><br /><br />Still, the yuan has continued to make inroads, especially since Western sanctions that froze Russia's foreign exchange reserves highlighted the potential risk of holding dollars.<br /><br />China has entered into non-dollar trade agreements with countries such as Brazil. And the yuan has overtaken the dollar as Russia's most traded currencysince Moscow was largely cut off from global finance after its invasion of Ukraine last year.<br /><br />But analysts say the dollar is unlikely to lose its dominance in global markets in the foreseeable future. That's as the yuan is too tightly controlled by the Chinese government.<br /><br />Read the original article on Business Insider<br /><br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-71388562973275715592023-04-05T16:44:47.945-07:002023-04-05T16:44:47.945-07:00China, Malaysia to discuss Asian Monetary Fund to ...China, Malaysia to discuss Asian Monetary Fund to reduce dependence on US dollar<br /><br />https://www.foxbusiness.com/economy/china-malaysia-discuss-asian-monetary-fund-reduce-dependence-us-dollar<br /><br />China and Brazil recently struck a deal to ditch the U.S. dollar in favor of their own currencies in trade transactions<br /><br />Malaysia is reviving a decades-old proposal to create an Asian Monetary Fund to reduce dependence on the U.S. dollar, with China being open to talks about the matter.<br /><br />Malaysian Prime Minister Anwar Ibrahim proposed the fund last week, Bloomberg reported.<br /><br />"When I had a meeting with President Xi Jinping, he immediately said, ‘I refer to Anwar’s proposal on the Asian Monetary Fund’, and he welcomed discussions," Anwar, who also serves as the country's finance minister, told the Malaysian parliament on Tuesday.<br /><br />"There is no reason for Malaysia to continue depending on the dollar," he added.<br /><br />Anwar said he shelved forming an Asian Monetary Fund during his first stint as finance minister in the 1990s. At the time, the idea failed to gain traction as the U.S. dollar was still seen as strong, he said.<br /><br />The dollar index reached a record-high in September 2022 as other Asian currencies hit multi-decade lows, the news report said.<br /><br />Recently, China and Brazil struck a deal to ditch the U.S. dollar in favor of their own currencies in trade transactions.<br /><br /><br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-41597326965740768632023-03-29T16:41:45.478-07:002023-03-29T16:41:45.478-07:00S.L. Kanthan
@Kanthan2030
Chinese Yuan is already ...S.L. Kanthan<br />@Kanthan2030<br />Chinese Yuan is already a truly international currency. Here are some interesting facts about RMB:<br /><br />🔹One of the five currencies that make up IMF’s SDR — international reserve basket.<br />🔹5th largest payment currency in the world<br />🔹5th largest reserve currency<br />🔹3rd largest currency in trade settlement<br /><br />China’s delicate balancing act is to internationalize yuan, while managing its value — i.e., ensuring that it doesn’t get too strong.<br /><br />https://twitter.com/Kanthan2030/status/1641036674661761024?s=20<br /><br />----------<br /><br />Michael Goh 🇨🇳 🇷🇺<br />@mkggoh<br />Replying to<br />@Hlomza_ZA<br />and<br />@Kanthan2030<br />In 2021, yuan settlement jumped 20.7% to 5.77 trillion yuan for trade in goods, accounting for 14.7% of total cross-border goods trade settlement, according to the PBOC's 2022 RMB Internationalization<br /><br />https://twitter.com/mkggoh/status/1641048606663925762?s=20Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-81441311979201322982023-03-29T14:05:32.081-07:002023-03-29T14:05:32.081-07:00The dollar is our superpower, and Russia and China...The dollar is our superpower, and Russia and China are threatening it<br /><br />by Fareed Zakaria<br /><br />https://www.washingtonpost.com/opinions/2023/03/24/us-dollar-strength-russia-china/<br /><br /><br />The dollar is America’s superpower. It gives Washington unrivaled economic and political muscle. The United States can slap sanctions on countries unilaterally, freezing them out of large parts of the world economy. And when Washington spends freely, it can be certain that its debt, usually in the form of T-bills, will be bought up by the rest of the world. Sanctions imposed on Russia for its invasion of Ukraine combined with Washington’s increasingly confrontational approach to China have created a perfect storm in which both Russia and China are accelerating efforts to diversify away from the dollar. Their central banks are keeping less of their reserves in dollars, and most trade between them is being settled in the yuan. They are also, as Putin noted, making efforts to get other countries to follow suit.<br /><br />-----------<br /><br />China Says It Will Set up Yuan Clearing Arrangements in Brazil<br /><br /><br />https://money.usnews.com/investing/news/articles/2023-02-07/china-says-it-will-set-up-yuan-clearing-arrangements-in-brazil<br /><br />BEIJING (Reuters) - China's central bank has signed a memorandum of understanding on setting up yuan clearing arrangements in Brazil, it said on Tuesday, in a move to help boost the currency's global clout.<br /><br />The establishment of such arrangements for the renminbi (RMB), or the yuan, would be beneficial to cross-border transactions, and further promote bilateral trade and investment facilitation, the People's Bank of China said on Tuesday.<br /><br />China has in recent months signed similar yuan clearing deals with Pakistan, Kazakhstan and Laos.<br /><br />Two-way trade between China and Brazil reached $172 billion in 2022, according to data from Chinese customs.<br /><br />China has been trying to boost the yuan globally since 2009 to reduce reliance on the U.S. dollar in trade and investment settlements and challenge the greenback's role as the world's major reserve currency.<br /><br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-46013313835931091742023-03-25T17:00:54.686-07:002023-03-25T17:00:54.686-07:00US bank trouble heralds end of dollar reserve syst...US bank trouble heralds end of dollar reserve system – Asia Times<br /><br /><br /><br />https://asiatimes.com/2023/03/us-bank-trouble-heralds-end-of-dollar-reserve-system/<br /><br /><br />Correspondingly, the dollar balance sheet of the world banking system exploded, as gauged by the volume of overseas claims in the global banking system. This opened up a new vulnerability, namely counterparty risk, or the exposure of banks to enormous amounts of short-term loans to other banks.<br /><br />America’s chronic current account deficits of the past 30 years amount to an exchange of goods for paper: America buys more goods than it sells, and sells assets (stocks, bonds, real estate, and so on) to foreigners to make up the difference.<br /><br />America now owes a net $18 trillion to foreigners, roughly equal to the cumulative sum of these deficits over 30 years. The trouble is that the foreigners who own US assets receive cash flows in dollars, but need to spend money in their own currencies.<br /><br />With floating exchange rates, the value of dollar cash flows in euro, Japanese yen or Chinese RMB is uncertain. Foreign investors need to hedge their dollar income, that is, sell US dollars short against their own currencies.<br /><br />That’s why the size of the foreign exchange derivatives market ballooned along with America’s liabilities to foreigners. The mechanism is simple: If you are receiving dollars but pay in euros, you sell dollars against euros to hedge your foreign exchange risk.<br /><br />But your bank has to borrow the dollars and lend them to you before you can sell them. Foreign banks borrowed perhaps $18 trillion from US banks to fund these hedges. That creates a gigantic vulnerability: If a bank looks dodgy, as did Credit Suisse earlier this month, banks will pull credit lines in a global run.<br /><br />Before 1971, when central banks maintained exchange rates at a fixed level and the United States covered its relatively small current account deficit by transferring gold to foreign central banks at a fixed price of $35 an ounce, none of this was necessary.<br /><br />The end of the gold link to the dollar and the new regime of floating exchange rates allowed the United States to run massive current account deficits by selling its assets to the world. The population of Europe and Japan was aging faster than the US, and had a correspondingly greater need for retirement assets. That arrangement is now coming to a messy end.<br /><br />One failsafe gauge of global systemic risk is the price of gold, and especially the price of gold relative to alternative hedges against unexpected inflation. Between 2007 and 2021, the price of gold tracked inflation-indexed US Treasury securities (“TIPS”) with a correlation of about 90%.<br /><br />Starting in 2022, however, gold rose while the price of TIPS fell. Something like this happened in the aftermath of the 2008 global financial crisis, but the past year’s move has been far more extreme. Shown below is the residual of the regression of the gold price against 5- and 10-year maturity TIPS.<br /><br /><br />If we look at the same data in a scatter plot, it’s clear that the linear relationship between gold and TIPS remains in place, but it has shifted both its baseline and steepened its slope.<br /><br />In effect, the market worries that buying inflation protection from the US government is like passengers on the Titanic buying shipwreck insurance from the captain. The gold market is too big and diverse to manipulate. No one has a lot of confidence in the US Consumer Price Index, the gauge against which the payout of TIPS is determined.<br /><br />The dollar reserve system will go out not with a bang, but a whimper. The central banks will step in to prevent any dramatic failures. But bank balance sheets will shrink, credit to the real economy will diminish and international lending in particular will evaporate.<br /><br />At the margin, local currency financing will replace dollar credit. We have already seen this happen in Turkey, whose currency imploded during 2019-2021 as the country lost access to dollar and euro financing.<br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-4381116612545259732023-03-25T17:00:22.518-07:002023-03-25T17:00:22.518-07:00US bank trouble heralds end of dollar reserve syst...US bank trouble heralds end of dollar reserve system – Asia Times<br /><br /><br /><br />https://asiatimes.com/2023/03/us-bank-trouble-heralds-end-of-dollar-reserve-system/<br /><br />Bank crisis not a credit quality problem but stems instead from now-impossible task of financing America’s ever-expanding foreign debt<br /><br />By DAVID P. GOLDMAN<br /><br />“The dollar reserve system will go out not with a bang, but a whimper.”<br /><br />Good article on how foreign banks will slowly start unwinding their $18 trillion of dollar-based assets, including US treasuries.<br /><br />Gold and Chinese Yuan will become vital players in global trade. (Local currency swaps too).<br /><br />Those who pooh-pooh yuan don’t understand that petroyuan is already a reality — Russian and Iranian oil are being sold in RMB.<br /><br />And consider Turkiye’s currency (Lira) which was on a precipitous downfall but was saved by the embrace of China’s yuan.<br /><br />Other countries should have really started de-dollarization after the 2008 financial crisis, but they succumbed to geopolitical pressure.<br /><br /><br />-----------<br /><br /><br />The US banking system is broken. That doesn’t portend more high-profile failures like Credit Suisse. The central banks will keep moribund institutions on life support.<br /><br />But the era of dollar-based reserves and floating exchange rates that began on August 15, 1971, when the US severed the link between the dollar and gold, is coming to an end. The pain will be transferred from the banks to the real economy, which will starve for credit.<br /><br />And the geopolitical consequences will be enormous. The seize-up of dollar credit will accelerate the shift to a multipolar reserve system, with advantage to China’s RMB as a competitor to the dollar.<br /><br />Gold, the “barbarous relic” abhorred by John Maynard Keynes, will play a bigger role because the dollar banking system is dysfunctional, and no other currency—surely not the tightly-controlled RMB—can replace it. Now at an all-time record price of US$2,000 an ounce, gold is likely to rise further.<br /><br />The greatest danger to dollar hegemony and the strategic power that it imparts to Washington is not China’s ambition to expand the international role of the RMB. The danger comes from the exhaustion of the financial mechanism that made it possible for the US to run up a negative $18 trillion net foreign asset position during the past 30 years.<br /><br />Germany’s flagship institution, Deutsche Bank, hit an all-time low of 8 euros on the morning of March 24, before recovering to 8.69 euros at the end of that day’s trading, and its credit default swap premium—the cost of insurance on its subordinated debt—spiked to about 380 basis points above LIBOR, or 3.8%.<br /><br />That’s as much as during the 2008 banking crisis and the 2015 European financial crisis, although not quite as much as during the March 2020 Covid lockdown, when the premium exceeded 5%. Deutsche Bank won’t fail, but it may need official support. It may have received such support already.<br /><br />This crisis is utterly unlike 2008, when banks levered up trillions of dollars of dodgy assets based on “liar’s loans” to homeowners. Fifteen years ago, the credit quality of the banking system was rotten and leverage was out of control. Bank credit quality today is the best in a generation. The crisis stems from the now-impossible task of financing America’s ever-expanding foreign debt.<br /><br />It’s also the most anticipated financial crisis in history. In 2018, the Bank for International Settlements (a sort of central bank for central banks) warned that $14 trillion of short-term dollar borrowings of European and Japanese banks used to hedge foreign exchange risk were a time bomb waiting to explode (“Has the derivatives volcano already begun to erupt?”, October 9, 2018).<br /><br />In March 2020, dollar credit seized up in a run for liquidity when the Covid lockdowns began, provoking a sudden dearth of bank financing. The Federal Reserve put out the fire by opening multi-billion-dollar swap lines to foreign central banks. It expanded those swap lines on March 19.Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-74878876153780436712023-03-13T20:45:00.409-07:002023-03-13T20:45:00.409-07:00Arif Rafiq
@ArifCRafiq
“The only reason that Ameri...Arif Rafiq<br />@ArifCRafiq<br />“The only reason that America can run the deficits that it does is because the dollar is the global reserve…As we move to a more multipolar financial system, it will be tougher for the US to run big debts.”<br /><br />https://twitter.com/ArifCRafiq/status/1635273905085755394?s=20<br /><br /><br />---------<br /><br />Why Biden is wise to reduce the deficit<br />Progressives are a bit too sanguine about debt levels<br /><br />https://www.ft.com/content/c99ba51b-3aac-40a4-b393-6fb5f56ba71b?accessToken=zwAAAYbd2YfskdPJm6UbOqxApNOzk2-19WunGw.MEYCIQCCWJNNpPoerDjz7p_Y9x4y84NXf0IUSjKSTsXDvO1oawIhANNWwOfAu6qzrJoQwB_-oLVB6UtFl_Is9oh6YRp1V-T0&segmentId=e95a9ae7-622c-6235-5f87-51e412b47e97&shareType=enterprise<br /><br />by Raana Foroohar<br /><br /><br /><br /><br /><br />Anyway, although we all know that tax cuts and trickle-down economics haven’t created more broadly shared prosperity, I’ve long thought that progressives were a bit too sanguine about debt levels. Let’s say, just for argument’s sake, that a mild recession produced a 20 per cent decline in tax receipts over the next year or two, which is not an unusual outcome during a down cycle, according to one of my favourite market analysts, Luke Gromen, who wrote about the topic recently in an issue of his newsletter, The Forest for the Trees. Let’s also assume a 4.5 per cent interest rate on federal debt (which may be a conservative estimate if the Fed keeps hiking), and a 12 per cent increase in entitlement payouts (also conservative given the number of ageing Americans). Taking those figures, Gromen shows that the interest expense of government debt would go back to the Covid crisis peaks that resulted in a “crash” in the UST market, and subsequently pushed the Fed into more quantitative easing.<br /><br />I’m not saying this is about to happen. But I am saying that it’s a tricky time in the economy, with the end of cheap money, cheap labour and cheap energy, and that makes it a potentially dangerous time for any country or company holding much debt. The failure of Silicon Valley Bank and the subsequent dominoes now falling has reminded us that there is plenty of hidden risk in the system at the moment.<br /><br /><br />------<br /><br /><br /><br />The only reason that America can run the deficits that it does is because the dollar is the global reserve. That won’t change immediately, but I do believe that the balance of global reserves will change significantly over time, in part because energy autocrats have seen dollar reserves weaponised since the war in Ukraine. As we move to a more multipolar financial system, it will be tougher for the US to run big debts. We will eventually have to come back to the kind of guns and butter debates about spending that we stopped having from the late 1970s onwards. For this reason, I think it’s wise for the Biden administration to show it cares about debt. Ed, would you agree, and how will it play politically?<br /><br />---------<br /><br /><br />Edward Luce Responds:<br /><br /><br /><br /><br />Will the resulting deficits endanger the US dollar? I don’t see much sign of that. The US dollar has accounted for around 60 per cent of global central bank reserves for the last couple of decades and that share has barely shifted. Countries without reserve currencies run budget deficits of 5 per cent of GDP without the sky falling on their heads. The key is to ensure that US trend growth is higher than interest rates on federal debt in order to hold it at stable levels. If that proves impossible, then the greenback could lose its throne. Even were Armageddon to strike, however, Art Laffer would still be available for power point presentations on his magical curve.Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-80627841583491458292023-03-08T16:58:02.248-08:002023-03-08T16:58:02.248-08:00India's oil deals with Russia dent decades-old...India's oil deals with Russia dent decades-old dollar dominance | Reuters<br /><br /><br />https://www.reuters.com/markets/currencies/indias-oil-deals-with-russia-dent-decades-old-dollar-dominance-2023-03-08/<br /><br />India in the last year displaced Europe as Russia's top customer for seaborne oil, snapping up cheap barrels and increasing imports of Russian crude 16-fold compared to before the war, according to the Paris-based International Energy Agency. Russian crude accounted for about a third of its total imports.<br />----------<br /><br />NEW DELHI/LONDON, March 8 (Reuters) - U.S.-led international sanctions on Russia have begun to erode the dollar's decades-old dominance of international oil trade as most deals with India - Russia's top outlet for seaborne crude - have been settled in other currencies.<br /><br />The dollar's pre-eminence has periodically been called into question and yet it has continued because of the overwhelming advantages of using the most widely-accepted currency for business.<br /><br />India's oil trade, in response to the turmoil of sanctions and the Ukraine war, provides the strongest evidence so far of a shift into other currencies that could prove lasting.<br /><br />The country is the world's number three importer of oil and Russia became its leading supplier after Europe shunned Moscow's supplies following its invasion of Ukraine begun in February last year.<br /><br /><br />-------<br /><br />Some Dubai-based traders, and Russian energy companies Gazprom and Rosneft are seeking non-dollar payments for certain niche grades of Russian oil that have in recent weeks been sold above the $60 a barrel price cap, three sources with direct knowledge said.<br /><br />The sources asked not to be named because of the sensitivity of the issue.<br /><br />Those sales represent a small share of Russia's total sales to India and do not appear to violate the sanctions, which U.S. officials and analysts predicted could be skirted by non-Western services, such as Russian shipping and insurance.<br /><br />Three Indian banks backed some of the transactions, as Moscow seeks to de-dollarise its economy and traders to avoid sanctions, the trade sources, as well as former Russian and U.S. economic officials, told Reuters.<br /><br />But continued payment in dirhams for Russian oil could become harder after the United States and Britain last month added Moscow and Abu Dhabi-based Russian bank MTS to the Russian financial institutions on the sanctions list.<br /><br />MTS had facilitated some Indian oil non-dollar payments, the trade sources said. Neither MTS nor the U.S. Treasury immediately responded to a Reuters request for comment.<br /><br />An Indian refining source said most Russian banks have faced sanctions since the war but Indian customers and Russian suppliers are determined to keep trading Russian oil.<br /><br />"Russian suppliers will find some other banks for receiving payments," the source told Reuters.<br /><br />"As it is, the government is not asking us to stop buying Russian oil, so we are hopeful that an alternative payment mechanism will be found in case the current system is blocked."<br /><br /><br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-48567925747043279442023-02-27T12:20:50.859-08:002023-02-27T12:20:50.859-08:00Money and Empire: Charles P. Kindleberger and the ...Money and Empire: Charles P. Kindleberger and the Dollar System<br /><br />By Perry Mehrling<br /><br />https://www.bu.edu/gdp/2022/11/08/money-and-empire-charles-p-kindleberger-and-the-dollar-system/<br /><br />Charles P. Kindleberger ranks as one of the 20th century’s best known and most influential international economists. A professor of International Economics at the Massachusetts Institute of Technology (MIT) from 1948-1976, he taught cosmopolitanism to a world riven with nationalist instinct. He worked to relieve the fears of his fellow citizens through education, thinking that if people understood how the dollar system worked, they would stop trying to destroy it. His research at the New York Federal Reserve and Bank for International Settlements during the Great Depression, his wartime intelligence work and his role in administering the Marshall Plan gave him deep insight into how the international financial system really operated.<br /><br />In the new book, “Money and Empire: Charles P. Kindleberger and the Dollar System,” Perry Mehrling traces the evolution of Kindleberger’s thinking in the context of a “key-currency” approach to the rise of the dollar system, which he argues is an indispensable framework for global economic development in the post-World War II era. The overall arc of the book follows the transformation of the dollar system, as seen through the eyes of Kindleberger.<br /><br />The book charts Kindleberger’s intellectual formation and his evolution as an international economist and historical economist. As a biography of both the dollar and Kindleberger, this book is also the story of the development of ideas about how money works. In telling this story, Mehrling ultimately sheds light on the underlying economic forces and political obstacles shaping a globalized world.<br /><br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-41041881412202101742023-01-27T16:19:29.587-08:002023-01-27T16:19:29.587-08:00#US: #Pakistan can buy #Russian #oil despite restr...#US: #Pakistan can buy #Russian #oil despite restrictions. “So, we have encouraged countries to take advantage of that, even those countries that have not formally signed on to the price cap, so that they can acquire oil in some cases at a steep discount"<br />https://www.dawn.com/news/1733661<br /><br />The United States has reiterated that Pakistan can purchase oil from Russia at a discounted price even though it has not signed a Washington-backed price-cap on Russian petroleum products.<br /><br />US State Department’s spokesperson Ned Price told reporters at a Tuesday afternoon news briefing that Pakistan can also take advantage of the concessions Washington has given to other countries for buying oil from Russia.<br /><br />“So, we have encouraged countries to take advantage of that, even those countries that have not formally signed on to the price cap, so that they can acquire oil in some cases at a steep discount from what they would otherwise acquire from, in this case, Russia,” Mr Price said.<br /><br />On December 3, 2022, G7 and EU countries set a price-cap of $60 per barrel on Russian oil to prevent Moscow from using the revenues to finance its war against Ukraine.<br /><br />Since, Europe and the United States no longer import crude oil from Russia, the controlled purchase would only affect third countries, like Pakistan. Islamabad has not yet signed the accord, mainly because Pakistan does not import oil from Russia.<br /><br />Mr Price said the US approach to the purchase of oil from Russia has been laid out in the price-cap mechanism that it worked out with other countries around the world, including the G7.<br /><br />“And the virtue of the price cap is that it allows energy markets to continue to be resourced while depriving Moscow of the revenue it would need to continue to propagate and fuel its brutal war against Ukraine,” the US official said.<br /><br />“We have made the point that we have very intentionally not sanctioned Russian oil. Instead, it’s now subject to the price cap.” The US, he said, has been very clear that now was not the time to increase economic activity with Russia.<br /><br />“But we understand the imperative of keeping global energy markets well resourced, well supplied, and the price-cap, we believe, provides a mechanism to do that,” he added.<br /><br />On Friday, Minister for Economic Affairs Ayaz Sadiq, and Russia’s Energy Minister Nikolay Shulginov said at a joint news conference in Islamabad that they hope to sign an oil deal by late March, enabling Pakistan to buy Russian oil at discounted rates.<br /><br />A joint statement issued after their talks said that the two sides reached an in-principle agreement on the supply of Russian crude oil and oil products to Pakistan, with technical details to be finalised in March at the latest.<br /><br />“We have decided that it would be a good idea for Pakistan to approach Gazprom and Novatek, two largest LNG-producing companies, in late 2023 to discuss the conditions” for buying LNG, the Russian minister said.<br /><br />Energy-starved Pakistan imports approximately 430,000mt of motor gasoline, 200,000mt diesel and 650,000mt crude oil at a cost of $1.3 billion per month.<br /><br />Market observers earlier this month warned Pakistan may face fuel shortages in the near future as importers struggle to secure dollars to close deals. The country’s foreign exchange reserves have dwindled to their lowest levels in almost nine years.<br /><br />Buying oil from Russia at a discounted price could ease the pressure.Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-40868679585088416392023-01-22T17:14:24.137-08:002023-01-22T17:14:24.137-08:00Russia and Pakistan might cut unprecedented oil de...Russia and Pakistan might cut unprecedented oil deal, with China as middleman<br />January 22, 2023 Wajahat S. Khan<br /><br /><br />https://www.gzeromedia.com/russia-and-pakistan-might-cut-unprecedented-oil-deal-with-china-as-middleman<br /><br />Cold War rivals Russia and Pakistan are negotiating an agreement for the Russians to start selling cheap oil to energy-starved Pakistan in March.<br /><br />This will make Islamabad yet another Asian customer of Russian crude at a time when Moscow’s cash inflows are limited by a G7/EU oil cap and sanctions. Also, considering Pakistan is dead broke, payments will be made through a “friendly” country, presumably China – a power play for Beijing, whose yuan will be used for the transactions, giving the currency more sway as an alternative to the US dollar.<br /><br />How is this deal going to affect American interests in the region? And why is Pakistan, which wants to balance its ties with Washington, giving business to the Russians through China?<br /><br />First, some history. Although the agreement isn’t finalized, it’ll be geopolitically novel when it is because Pakistan is an unlikely destination for Russian business. Unlike India, Islamabad and Moscow have had no commercial ties for decades.<br /><br />Considering Pakistan spent the Cold War spying on the USSR and/or attacking its troops in Afghanistan (the Soviet Union paid back in kind by arming India, Pakistan’s archrival), the two sides haven’t exactly behaved like partner-material.<br /><br />Enter China. Pakistan and China have been “Iron Brothers” for decades. Even though Islamabad was a non-treaty US ally until not too long ago, the Pakistanis and the Chinese have always remained “all-weather friends.”<br /><br />However, as India settled into the role of becoming America’s strategic partner in the region, displacing Pakistan as the preferred South Asian ally over the last two decades, the Chinese encouraged Pakistan to open up to the Russians, and vice versa. Now, a once hesitant Islamabad doesn’t just want Russian oil, but also natural gas, weapons and more. Still, Islamabad wants to stay aligned with the American camp.<br /><br />Why is Pakistan doing this? Islamabad’s energy bills make the biggest chunk of its imports. Cheaper oil from Russia will obviously help its escalating balance of payments crisis and ballooning trade deficit.<br /><br />But the biggest issue is with dwindling foreign exchange reserves. A year ago, Pakistan had $17 billion in the bank. Today, foreign reserves have dwindled to $4.3 billion, which will pay for less than a month of imports.<br /><br />To manage the dollar crunch, Pakistan could use the Chinese yuan in a swap with China to pay Russia once the oil flows in (it expects to get 35% of its annual crude oil imports from 70 million barrels of Russian crude), putting its import-regime firmly in the China-Russia camp.<br /><br />Pakistan thus finds itself between a rock and a hard place: It needs the cheap Russian oil but also wants to avoid antagonizing the US and its friends in the Gulf, Pakistan’s main energy suppliers — especially considering that Islamabad has been negotiating bailouts with the Washington-backed IMF and deferred oil payments from the Saudis and the Emiratis.<br /><br />While the Pakistanis defend their position by citing neighboring India as an example of a country that buys Russian oil even as it tilts towards the US and deals with the Gulf states, Islamabad is in a very different position compared to New Delhi because Pakistan is crawling toward default.<br /><br />But that’s exactly how Washington and Beijing might find confluence to stop Pakistan from failing. “The US view on this is that countries like Pakistan may at times be strategically important, but in the great power competition between China and US, it doesn’t matter a whole lot,” says Uzair Younus, director of the Pakistan Initiative at the Atlantic Council.<br /><br />Beyond Pakistan’s limited importance as a partner for counterterrorism in Afghanistan, he assesses that the view from Washington is that if others want to share the burden of propping up Pakistan and stabilizing its economy, so be it.<br /><br /><br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-70755908346720573892023-01-13T16:28:33.956-08:002023-01-13T16:28:33.956-08:00#Pakistan seeks change to #US world finance contro...#Pakistan seeks change to #US world finance control as #Cuba leads #UN bloc. Pak Ambassador Munir Akram: "many other countries, including its allies and friends, are not happy with that (having US$ dominate world #trade and #finance)" #Dollar https://www.newsweek.com/pakistan-seeks-change-us-world-finance-control-cuba-leads-un-bloc-1773464<br /><br />"When you look at the debt crises that we've seen, they're devastating from a humanitarian standpoint, and they can be debilitating when it comes to effective economic development and inclusive growth," he added. "So, there are a number of things that we talked about and that we clearly need to move forward."<br /><br />Among these steps Blinken highlighted was mobilizing both national and private sector creditors from other countries, as "it can't just be the United States." He said the U.S. was already supporting this through multinational platforms such as the Group of 20, or G20, a body comprising the world's top 20 economies and the European Union, and the Paris Club, which consists of 22 major creditor countries.<br /><br />But another "concern" expressed by Blinken was "the growth of untransparent debt, including off-balance-sheet debt and debt that's hidden by non-disclosure agreements" drafted by other companies and countries. Though Blinken did not reference China by name, he and other U.S. officials have often accused Beijing of pursuing such practices in Africa and other parts of the developing world to China's own benefit.<br /><br />Chinese Foreign Minister Qin Gang disputed the so-called "debt trap diplomacy" argument during a conference held Wednesday alongside African Union Commission Chair Moussa Faki Mahamat.<br /><br />"The so-called China's 'debt trap' in Africa is a narrative trap imposed on China and Africa," Qin was cited by the Chinese Foreign Ministry as saying. "Projects and cooperation carried out by China in Africa contributed to Africa's development and the improvement of people's lives. The African people have the biggest say in this."<br /><br />"China will continue to respect the will of the African people, and bring tangible benefits to the African people through China-Africa cooperation based on the realities in Africa," he added, "so as to achieve better common development."<br /><br /><br />Qin, who served as China's ambassador to the U.S. before his promotion was announced late last month, also argued that "Africa's debt problem is essentially an issue of development."<br /><br />"The solution to the problem requires addressing not only the symptoms but also the root causes by means of debt treatment, among others, so as to enhance Africa's independent and sustainable development capacity," he added. "China's financing cooperation with Africa is mainly in fields such as infrastructure development and production capacity, with a view to enhancing Africa's capacity for independent and sustainable development."<br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-2276967382483806922023-01-13T16:27:41.640-08:002023-01-13T16:27:41.640-08:00#Pakistan seeks change to #US world finance contro...#Pakistan seeks change to #US world finance control as #Cuba leads #UN bloc. Pak Ambassador Munir Akram: "many other countries, including its allies and friends, are not happy with that (having US$ dominate world #trade and #finance)" #Dollar https://www.newsweek.com/pakistan-seeks-change-us-world-finance-control-cuba-leads-un-bloc-1773464<br /><br />On the issue of restrictive trade measures, he argued that "more than 30 measures and systems of unilateral coercive measures against developing countries continue to be fully implemented," a trend he argued is "far from reversing" and "has exacerbated during the last few years."<br /><br />Cuba has been subject to one of the world's longest-running sanction campaigns mounted by the U.S. While Washington has regularly been condemned by a near-unanimous consensus of the international community over these measures, America's leading role in the global financial network has generated caution among those potentially seeking to do business with the Communist-led island.<br /><br />Western sanctions have had a similar effect on a number of other nations represented in the G77 and present at Thursday's gathering, including Iran, Myanmar, North Korea, Syria, Venezuela and Zimbabwe. The vast majority of these measures have come in response to allegations of human rights abuses and authoritarian policies.<br /><br />Cuba's top diplomat vowed to pursue the G77 and China agenda "in a flexible and always constructive way, based on the broadest possible consensus, in order to implement the transformative vision defended by our Group." He asserted that "it will be our priority to foster international solidarity and cooperation in support of the post-pandemic recovery of our nations."<br /><br />And Rodríguez Parrilla promised to establish a range of cooperative projects among nations in the Global South for health, biotechnology and education, three fields in which Cuba has ranked among the highest in the developing world, among other areas.<br /><br />He also promised to challenge the most influential and wealthiest nations on the matter of global responsibilities.<br /><br />"We will face any attempt to put on our shoulders the burden of unfulfilled promises by the most powerful nations, which allocate millions to the weapons manufacturing, not to development," he said. "We will promote tangible commitments in terms of financing under favorable conditions and capacity building for the countries of the South."<br /><br />While U.S. President Joe Biden has yet to show any signs of easing sanctions on Cuba, a move partially pursued by the U.S. when he served as vice president to President Barack Obama only to be reversed by President Donald Trump, the current administration has acknowledged calls for reform.<br /><br />Addressing Pakistan's push for changes to the International Monetary Fund quota regime, State Department spokesperson Ned Price deferred reporters to the Washington, D.C.-based global financial institution during a press briefing Thursday. He did state, however, that "we, of course, want to see Pakistan continue down the path of reform."<br /><br />"We want to be a partner," Price said. "We will continue to be a partner to Pakistan when it comes to all of their priorities, whether it's security, whether it's economic in this case, or humanitarian in the case of the provision of the additional funding for the flood relief today."<br /><br />U.S. Secretary of State Antony Blinken also weighed in last week on calls for debt reform for African nations on the heels of the U.S.-Africa Leaders' Summit.<br /><br />"This is a subject, a theme that we've heard loudly and clearly here," Blinken said. "It's not new in the sense that this has been part of the conversation for some time. And there is no doubt that the rise of unsustainable debt burdens, especially in Africa, is a tremendous challenge, and it's one that we're committed to addressing."<br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-24299136404371477432023-01-13T16:26:01.052-08:002023-01-13T16:26:01.052-08:00#Pakistan seeks change to #US world finance contro...#Pakistan seeks change to #US world finance control as #Cuba leads #UN bloc. Pak Ambassador Munir Akram: "many other countries, including its allies and friends, are not happy with that (having US$ dominate world #trade and #finance)" #Dollar https://www.newsweek.com/pakistan-seeks-change-us-world-finance-control-cuba-leads-un-bloc-1773464<br /><br />Pakistan's envoy to the United Nations has expressed the need to establish alternatives to the current U.S.-dominated global financial system as he handed over the chair of a massive bloc of developing nations to Cuba.<br /><br />Speaking to a small group of journalists ahead of the Group of 77, or G77, handover ceremony on Thursday, Pakistani ambassador to the U.N. Munir Akram asserted that, "as far as global governance is concerned, the greatest structural issue is the control of the international financial system by the United States."<br /><br />He said "many other countries, including its allies and friends, are not happy with that," though Washington's position reflected the reality that "the United States is the dominant financial power in the world, and this will not change in the near future."<br /><br />"But efforts to democratize the international financial architecture will be made," Akram said. "They should be made."<br /><br />Asked by Newsweek to expand on the direction of these initiatives, the senior Pakistani diplomat pointed to the quota system instituted by the International Monetary Fund (IMF), which is based on economic status, prioritizing wealthier, mostly Western countries, while leaving poorer nations with the least say in how money is distributed.<br /><br />He also called for reform in how sovereign debt is handled and for the U.S.-led World Bank to overhaul the borrowing system, using its preeminent credit rating to borrow on behalf of developing nations that would then be loaned the money.<br /><br />"These are just a few issues that need to be addressed in order to change the international financial architecture," Akram said. "Whether we get there? It's a difficult issue. Obviously there are countries whose interests do not want that."<br /><br />But as he prepared to conclude Pakistan's tenure as G77 chair along with leadership of an array of projects on issues such as fighting poverty, combating climate change and closing the technology gap for developing nations, he placed his confidence in Cuba to lead the way.<br /><br />"I'm sure that they will have a plan of action. I think the objectives are clear and common," Akram said. "As such, it may be expected that they will push hard for a realization of some of the objectives."<br /><br />Cuban Foreign Minister Bruno Rodríguez Parrilla outlined this plan of action hours later, addressing the U.N. group that has expanded to some 134 nations since its initial founding by non-aligned states amid the Cold War nearly six decades ago. Those present included representatives of the majority of nations spanning Asia, Africa and Latin America, with China holding a unique position as the world's second largest economy, leading the group to often be referred to as "the G77 and China."<br /><br />"The great challenges imposed by the current economic order on the developing world have hit their highest point during these times of systematic crises," Rodríguez Parrilla said, "namely health, climate, energy, food and economic crises; escalation of geo-political tensions and renewed forms of domination and hegemony."<br /><br />Among the issues that he argued still needed to be addressed by the international community were "unequal access to vaccines, the digital gap, the burden of the foreign debt, the structural reform of the international financial architecture, development financing flows, food insecurity, restrictive trade measures, climate financing and capacity building."<br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-10163046423101928052022-12-24T16:51:16.628-08:002022-12-24T16:51:16.628-08:00Russia’s invasion & Pakistan’s floods defined ...Russia’s invasion & Pakistan’s floods defined 2022 in climate<br /><br />https://www.climatechangenews.com/2022/12/21/russias-invasion-pakistans-floods-defined-2022-in-climate/<br /><br /><br />After an avalanche of climate pledges last year, 2022 was when governments and corporations started to grapple with implementation<br /><br /><br />In 2021, governments and corporations got drunk on net zero hype. 2022 was the year when the hangover kicked in and they started to grapple with what their promises meant and whether they were actually prepared to follow through.<br /><br />Cop26’s slogan of “coal, car, cash and trees” was replaced by Cop27’s sober “together for implementation”. Russia’s invasion of Ukraine sent fossil fuel prices soaring and governments scrambling to secure them in the short term while moving off them in the long term. Many pledges made in Glasgow slipped off the top of governments and CEO to-do lists.<br /><br />But the changing climate kept making the case for action. With large parts of Pakistan underwater and its people living for months by the side of the road, the case for loss and damage finance for climate victims finally became impossible to ignore. Here’s our run-down of what defined 2022 in the climate world.<br /><br />Russia’s invasion of Ukraine<br />On Thursday February 25, Russian troops advanced towards Ukraine’s capital Kyiv. The invasion had huge global implications, particularly for energy. But its immediate impacts were local and personal. The day after the advance on Kyiv began, Climate Home spoke to a climate campaigner stuck in a huge traffic jam as she fled the city, a climate scientist who had to debate the IPCC’s summary for policymakers under rocket fire and a green energy promoter who feared that investment in Ukraine would now disappear.<br /><br />The war highlighted how dependence on fossil fuels makes you vulnerable. Europe had to scramble to replace Russian gas with renewables and non-Russian gas. The latter sent energy prices around the world soaring and damaged the continent’s credibility as a self-styled climate leader. For the rest of the year, Europe tried not to pull a muscle pursuing a dash for gas at the same time as a renewables marathon. European divisions on whether to back foreign gas were laid bare at the G7 in June.<br /><br />In September, two pipelines carrying Russian gas exploded in suspicious circumstances. Experts said this highlighted the inherent vulnerability of an energy system which relies on moving large quantities of stuff across the world rather than relying on the sun and wind, which are harder to disrupt.<br /><br />Fossil fuel crisis<br />The economic impact of the invasion of Ukraine spread far beyond Europe. Countries like Sri Lanka, which has neglected renewables and relies on imported fossil fuels, were particularly vulnerable to the spike in the oil and gas price.<br /><br />About month after Russian troops marched towards Kyiv, protesters in Colombo advanced on the presidential palace of Gotobaya Rajapaksa. A few months later, on 9 July, he fled to Singapore, although his disciple Ranil Wickremesinghe remains in charge.<br /><br />Analysts told Climate Home that reliance on fossil fuel imports had contributed to the crisis. But that neither the government nor ordinary citizens have the money to invest in renewables and fix the problem. So Sri Lankans face power cuts, tourists stay away and the country struggles even more for foreign currency.<br /><br />Loss and damage breakthrough<br />This year saw huge advances on the issue of loss and damage, which is UN climatespeak for funding for victims of climate change. Developing countries have been pushing for a loss and damage fund for decades – to firm opposition from rich polluters.<br /><br />The issue was not even on the agenda at Cop26 last year or at the annual Bonn interim climate talks in June. But the Egyptian presidency backed its inclusion at Cop27. It became the main issue for climate campaigners and the global press.<br /><br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-81972530842402610132022-11-13T14:05:13.886-08:002022-11-13T14:05:13.886-08:00Russia’s gross international reserves (GIR) were u...Russia’s gross international reserves (GIR) were up by $3.6bn in a week to $571.2bn as of August 5, the Central Bank of Russia (CBR) reported, at the same time as individuals are buying record amounts of foreign currency.<br /><br />https://www.intellinews.com/russia-s-international-reserves-up-3-6bn-in-one-week-to-571bn-253235/<br /><br />Russia’s international reserves increased by 0.6% (or $3.6bn) in one week, the central bank reported on August 11. The CBR stopped reporting the monthly reserves figures at the end of January when total GIR stood at $630.2bn. (chart)<br /><br />"International reserves amounted to $574.8bn as of August 5, up by $3.6bn, or by 0.6%, in one week due to positive revaluation," the regulator said on its website.<br /><br />Foreign exchange is pouring into the CBR coffers after the current account surplus of Russia's balance of payments hit a new all-time high of $166bn in the first seven months of this year – triple its level in the same period a year earlier that was already a record high. Sanctions intended to reduce Russia’s revenue from energy exports have backfired, and after they sent prices soaring the Kremlin is earning more money than ever. Ironically, the highly effective bans on exports of equipment and technology to Russia have worked against the leaky energy sanctions as they have dramatically reduced imports to Russia that have only bolstered the current account surplus further.<br /><br />Some $300bn worth of gold and foreign currency CBR reserves were frozen shortly after the invasion of Ukraine in February, but the soaring revenues from oil exports will cover a large share of that money by the end of this year, say economists.<br /><br />Russians buy record amounts of FX on MOEX<br /><br />The crisis-scarred population have also been reacting to the sanctions on currency transactions by moving their cash savings out of the traditional dollars and euros into other currencies of the “friendly” countries.<br /><br />Individual purchases of currency on MOE overtook transactions by bankers for the first time ever in the second half of July, the CBR said in its latest financial market risks review.<br /><br />Net purchases of currency by individuals increased 1.3-fold from RUB176.1bn ($2.9bn) in June to RUB237.1bn ($3.9bn) in July – a new record, according to the CBR.<br /><br />Individuals mainly bought foreign currency at banks that could then send the money to accounts overseas.<br /><br />The outflow of currency has also been visible in the ruble-dollar exchange rate, as the ruble weakened and was trading at RUB60.6 at the time of writing, down from its recent high of almost RUB50 to the dollar. As imports recover, further growth of foreign currency demands can be expected for market players, the central bank said.<br /><br />The “yuanisation” of the Russian economy continues as a result of the Western sanctions imposed on Russia. The yuan became the third most traded currency in terms of volume of foreign exchange trading on the Moscow Exchange in July and will soon take second place, The Bell reported on August 8, as companies and individuals rush to get out of the dollar and into non-sanctioned currencies.<br /><br />Banks have been building up large amounts of dollars and euros they can’t spend due to sanctions and have been actively trying to swap them for other currencies.<br /><br />The government has been doing the same thing, signing trade deals with its partners in local currency and using other non-traditional currencies for international trade. Russia oil exports to India are now being settled in Chinese yuan, Hong Kong dollars and UAE dinars, according to reports.<br /><br />Ordinary Russians have been moving their savings out of dollars. Balances at retail bank accounts in foreign currency declined in July by $3bn, the CBR reports. Just before the war there was only one Russian bank that offered deposit accounts in yuan; now there are 20, according to The Bell.<br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-78214973219716662142022-11-03T11:02:00.284-07:002022-11-03T11:02:00.284-07:00Stephen Stapczynski
@SStapczynski
Europe needs &qu...Stephen Stapczynski<br />@SStapczynski<br />Europe needs "immediate action" to avoid a natural gas shortage in 2023, says the<br />@IEA<br />🇪🇺🚨<br /><br />⚠️ Europe faces a 30bcm shortfall next summer in gas needed to fuel its economy AND sufficiently refill storage<br />🇷🇺 Next year's challenge: lower Russian supply, higher Chinese LNG demand<br /><br />https://twitter.com/SStapczynski/status/1588144104268959744?s=20&t=IrMYdEfyiZifqCO3PD8AqwRiaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-58395228461610062472022-09-23T09:36:57.113-07:002022-09-23T09:36:57.113-07:00#Japan's #Toyota to stop #automobile #producti...#Japan's #Toyota to stop #automobile #production in #Russia due to #supplychain disruption amid #UkraineWar & western #sanctions. "After 6 months, we have not been able to resume normal activities and see no indication that we can restart in the future". https://asia.nikkei.com/Politics/Ukraine-war/Toyota-to-terminate-auto-production-in-Russia<br /><br />NAGOYA, Japan -- Toyota Motor said Friday it will exit from automobile production in Russia, citing difficulties supplying key materials and parts in the country amid the war in Ukraine.<br /><br />The automaker suspended operations at its plant in St. Petersburg on March 4, after the Russian invasion began.<br /><br />"After six months, we have not been able to resume normal activities and see no indication that we can restart in the future," Japan's top automaker said.<br /><br />A protracted disruption would hurt Toyota's ability to support its employees, leaving it no choice but to end production in the country, it said. Mounting geopolitical risks in the region are believed to have contributed to the decision as well.<br /><br />Toyota had continued to pay its factory workers after suspending production, reassigning them to maintenance and other tasks instead. Details regarding the termination process and treatment of employees at the St. Petersburg plant will be ironed out at a later time.<br /><br />Toyota holds a larger market share in Russia than any other Japanese automaker. It produced 80,000 vehicles and sold 110,000 in the country in 2021.<br /><br />It began locally producing vehicles in 2007 at St. Petersburg. The plant's lineup included the RAV4 sport utility vehicle and the Camry sedan in 2021.<br /><br />Nissan Motor, another Japanese automaker, has extended its production freeze at its St. Petersburg plant to the end of December from the end of September.Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.com