Thursday, December 25, 2008

Yuan, the New International Currency ?

For over a decade of trade, US dollars and Euro, and all other currencies flowed to China. While everyone else were spending in America, in Europe, and in the rest of the world buying Chinese products - the Chinese kept on saving, and saving. Today - they have an enormous amount of foreign exchange to the tune of nearly 2 Trillion US dollars.

Last Thursday, the semi-official China News agency said the Interior Ministry allowed companies based in the Yangtze River delta in Guangdong and Shanghai to use yuan along with U.S. dollars when trading with Hong Kong and Macau firms. The ministry appointed the Guangxi Zhuang Autonomous Region and Yunnan Province as test zones where trade transactions with the 10 ASEAN countries can be made in yuan.


In a related news, an Asean Monetary Fund worth 120 billion dollars is set to be approved at a regional summit in February, Malaysian Foreign Minister Rais Yatin said according to reports Wednesday.

"The matter is being discussed through the ASEAN finance ministers meeting in Singapore at present and we should receive news soon," Rais said according to state news agency Bernama. "But we have been informed that the fund would be a reality by the time the summit is held in February," he said.

Leaders of the 10-member Association of Southeast Asian Nations (ASEAN) group are to meet with their dialogue partners including China, Japan and South Korea, in Bangkok on February 24-26.

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