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According to the article above, China intends on launching its own oil benchmark. China is actually the 4th largest oil producer in the world behind the US, Saudi, and Russia.
What sort of affect will this have on our long term economy and what potential strongholds do Chinese companies have in the oil market?
For example, the US and Saudi Arabia have had a long term relationship whereby, oil is traded in US dollars.
How could China convince other countries to trade petroleum in Yuan?
So they will buy from Russians using their currency, the one that is currently "controlled" and in a slump?
Explain how Russia is going to be happy with that? Sure they will most likely make the deal, but Russian economy is down and heavily reliant on oil sales... Do they really want to rely on a country that manipulates their currency?
but hey, if it gets china to stop messing with their currency, then that's good news. If they don't make their exports cheaper, which means our imports will be more costly so it promotes "local" goods (local being this side of the world, nafta)
I think it would be good. The USD is too fragile up and down because it goes inversely (not exactly but pretty much) to what happens with the oil price. Maybe have half of the oil traded in USD and the other half in Yuan. Make it so.
I think it would be good. The USD is too fragile up and down because it goes inversely (not exactly but pretty much) to what happens with the oil price. Maybe have half of the oil traded in USD and the other half in Yuan. Make it so.
China recently devalued their currency overnight by edict. China's Yuan is not yet ready to become a world class currency. There remain too many unknowns and capital controls by their central commanders. In fact the IMF just put them off another year for consideration. IMO it will happen, just not soon. Maybe in the 5 - 10 year time frame the Yuan will have significant worldly presence. Oil, trade, investment and whatever.
I think it would be good. The USD is too fragile up and down because it goes inversely (not exactly but pretty much) to what happens with the oil price. Maybe have half of the oil traded in USD and the other half in Yuan. Make it so.
I think you have it backwards. Oil moves at times based on the fluctuation in USD valuation not the other way around. I don't think very many would call the USD fragile either
I think you have it backwards. Oil moves at times based on the fluctuation in USD valuation not the other way around. I don't think very many would call the USD fragile either
They work in concert but the oversupply of oil and resulting oil drop has vastly fueled the dollars rise. Volatile may be a better word to describe the dollar than fragile.
I work in Peru and since I arrived just over a year ago, the USD has gone from 2.59 PEN to 3.22 PEN today.
China recently devalued their currency overnight by edict. China's Yuan is not yet ready to become a world class currency. There remain too many unknowns and capital controls by their central commanders. In fact the IMF just put them off another year for consideration. IMO it will happen, just not soon. Maybe in the 5 - 10 year time frame the Yuan will have significant worldly presence. Oil, trade, investment and whatever.
If you're right, it's based on others having confidence in China and the Yuan. So I agree that it would be risky but I've also worked in China and I believe they would do everything they could to keep the confidence of buyers of the Yuan. But on the whole, I agree they don't seem ready for this. I was just saying I think it would be good for the USD overall.
They work in concert but the oversupply of oil and resulting oil drop has vastly fueled the dollars rise. Volatile may be a better work that fragile.
I work in Peru and since I arrived just over a year ago, the USD has gone from 2.59 PEN to 3.22 PEN today.
They don't work in concert. The USD strength or weakness impacts oil's price not the other way around. Also the price movement is necessarily volitility in the dollar as currencies trade in pairs, it may be your Peruvian dollars that are fragile
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