De-Dollarisation.

[shakespear]

Hopefully she (Hillary) will soon be under indictment by the FBI and any delusions of being in the White House will be over for her.  The USA needs a pro-business President to turn our economy around.

The aide that programed her server has just today informed the select committee on Bengazhi that he plans to take the 5th on any and all questions put before him.

[Anteros]

Hopefully she (Hillary) will soon be under indictment by the FBI and any delusions of being in the White House will be over for her.  The USA needs a pro-business President to turn our economy around.

The aide that programed her server has just today informed the select committee on Bengazhi that he plans to take the 5th on any and all questions put before him.

This really says it all, and yet the Hillary supporters claim there is a "right wing conspiracy" to go after her.  Truly shows how divided this country is and how different the perception of reality is for the two sides.   

[B.B.]

...and we will have adopted the Sovereign Currency the Amero across all the Americas from Alaska to Ottawa to NYC to Patagonia...

Won't happen, which is better for all parties, but it will be fun for the conspiracy theorists to go on about. 

A One Billion persons Americas Trading Block is the only real way to fight the massive Asian invasion and even more stark European capitulation.

Plus the UK.  After the Brexit they're going to recast "NAFTA" as the "North Atlantic Free Trade Agreement" to let granny, with at least a shred of her pride intact. 

B/B

[cufflinks]

...and we will have adopted the Sovereign Currency the Amero across all the Americas from Alaska to Ottawa to NYC to Patagonia...

Won't happen, which is better for all parties, but it will be fun for the conspiracy theorists to go on about. 

A One Billion persons Americas Trading Block is the only real way to fight the massive Asian invasion and even more stark European capitulation.

Plus the UK.  After the Brexit they're going to recast "NAFTA" as the "North Atlantic Free Trade Agreement" to let granny, with at least a shred of her pride intact. 

B/B

We do not do anything without "Granny's" financial centers and political approval (Rothschild's, BOE, BAE, BP, Lloyd's and the Big Bensters)  - we are already tied to the hip so might as well formalize it "North Atlantic Free Trade Agreement" works for me as long as they keep the non sovereign Euro currency on their side of the pond - Interesting the Blighters never gave up their sovereing currency the GBP and never suffered the fates of the PIIGS or is in now more PC to call them the GIIPS ooops giips or gypster is also a perjorative ... PIIGS it is.

[Manny]

Washington’s Financial Currency War on China: The Eclipsing of the US Dollar by the Yuan

The Chinese are in the process of displacing the monopoly of the US dollar. They are dropping their US Treasury bonds, stockpiling gold reserves, and opening regional distribution banks for their own national currency. This will give them easier access to capital markets and insulate them from financial manipulation by Washington and Wall Street.

Fearing the eclipsing of the US dollar and the Bretton Woods system by a rival financial architecture the US response has been an attempt to damage the Chinese markets and increase the value of China’s currency. China has responded through regulations in the market and then quantitative easing of its currency to maintain the low prices of Chinese manufactured goods and exports.

Read the rest here: http://www.globalresearch.ca/washingtons-financialcurrency-war-on-china-eclipsing-of-us-dollar-by-yuan/5473064

[andrewfi]

It is worth noting that the actions being roundly criticised by 'The West' as showing weakness in the economy and poor management are exactly the things that China's long term economic policy demands.

This is much the same as happened in Russia last year. Those changes will, undoubtedly cause some disruption, just as doing so did in the US back when they were moving into a position of primacy over a century ago.

History is interesting sometimes.

[cufflinks]

Dedollarization can only happen when the global trading partners can actually trust the alternatives - Bitcoin - no got hacked and MTGOX lost hundreds of millions USD worth...

The Chinese Yuan/Renminbi - the most corrput and manipulated government on the planet seconded only by Nigeria and Russia and Mexico and the Obamunists???

This would be laughable if it were not true:

http://www.businessinsider.com/barrons-cover-story-warns-alibaba-50-percent-2015-9

Barron's devastating cover story on Alibaba predicts the stock will tank 50%, and that's not even the worst of it...

This is how the entire rotten crooked Chinese country is run:

Chinese online retailing behemoth Alibaba took the stock market by storm when it went public almost exactly a year ago.

The September 19, 2014 IPO priced at $68 per share, giving the company an eye-popping valuation of $168 billion.

“Today what we got is not money," CEO Jack Ma said that day. "What we got is the trust from the people."

But in a new, devastating 3000-word cover story for Barron's, Jonathan Laing struggles to find any redeeming qualities in the company and its stock.

For starters, Laing believes the stock, which closed at $64.68 on Friday, is worth half that.

... Forty-five of the 52 brokerage analysts covering the company still have Buy recommendations on the stock, according to Bloomberg ... The average price target of this crowd: $95.50, up nearly 50% from the current level. It’s time to get real. A decline of up to 50% looks far more likely. Alibaba shares trade at about 25 times the consensus earnings estimate for the year ahead, and that should be closer to eBay ’s (EBAY) multiple of 15 ...

In addition to the rich valuation, Laing warns about competition and discusses the history of Chinese IPOs that went from hot to cold.

However, the bulk of Laing's screed raises red flags about corporate governance, conflicts of interest, counterfeit goods, and various other questionable business practices.

Particularly disturbing was the suggestion that Ma and his team might actually be making up some numbers, including its very flashy revenue growth stats, which Laing notes are considerably larger than other large tech growth companies like Google, Amazon.com, and Facebook.

... Anne Stevenson-Yang, founder of Chinese research firm JCapital Research, has closely tracked the mainland e-commerce industry in general and Alibaba specifically. She finds the growth numbers puzzling. She observes that “Alibaba’s financial reports have broken free of verifiable reality and have reached an escape velocity that doesn’t comport with Chinese government figures of overall retail sales, consumer spending, or online commerce.” Consider this: Alibaba claims to have 367 million users — about the same as one government agency’s estimate of China’s entire online-shopping population. Or this: Alibaba claims its average shopper spends 26% more on its sites each year than the average U.S. online shopper spends on all sites. Does that make any sense, given American consumers’ far greater affluence and ability to avail themselves of a vastly more developed e-commerce ecosystem?

... That $1,215 average spend at Alibaba also seems high in view of the total average annual per capita expenditure in China, online and at physical stores; that stands at about $2,260. It strains credulity that the average Alibaba user would spend over half of his consumer outlays on Taobao and Tmall, given that the sites have a negligible presence in categories that account for the bulk of consumer spending, like food and beverages, housing, transportation, home health products, and restaurant dining ...

Laing notes that Alibaba denies any of its reported figures have been inflated.

Ma's rags-to-riches story and disarming charm has probably helped Alibaba sell an image of integrity. But Laing's take-down of the company is comprehensive and detailed enough that you can't help but be left with a little doubt in your mind that something fishy is going on at the company.

"In the end, gaudy financial reports can only work for so long before reality intrudes," Laing writes. "This hard lesson figures to be driven home to Ma and his trusting investors in the coming years, and it won’t be pretty. "

[Manny]

Russia added about 13 tons [of gold to its reserves] in July and 24 tons the month before that. As tensions escalate with the U.S., the UK and the EU, Russia appears to be intensifying efforts to diversify out of their large dollar holdings and into physical gold.

http://russia-insider.com/en/politics/russian-gold-spree-continues-31-tonnes-august-alone/ri9856

[cufflinks]

At the same time Obama licking his ISIS wounds and wishing he had never agreed to Hitlerys social justice warrior marxist feminist human and womens rights at any costs Arab Spring debacles that have replaced warlords who could be influenced with the rabid fanatic radical islamist ISIS Army determined to scrub the lands of Islam of any infidels including Londonistan and Europastans which are currently being invaded by an army of 3 million Islamist ISIS sympatico Radicals determined to bring Sharia Law under control of Mecca and Tehran to all of Europa.

Obama is privately relieved to be politically and militarily bailed out by Putin who was right when he warned be careful who you human rights at all costs Obamunists SJWs replace Assad with unless you want another Iran/Iraq Yemen and Egypt and Libya chaotic islamist radicalized ISIS Army strongholds on your hands.

Putin was right the so called neutral Syrians were in fact ISIS sympathizers of like mind and spirit.

At least Obama was timid enough not to commit 100,000 US troops on the ground of Syria - yet.

[Tom Cat]

Are China and Russia making moves against the dollar?

China, Russia and the Still-Almighty Dollar

http://www.usnews.com/news/articles/2015/09/24/are-china-and-russia-trying-to-undermine-the-us-dollar

[WestCoast]

Are China and Russia making moves against the dollar?

China, Russia and the Still-Almighty Dollar

http://www.usnews.com/news/articles/2015/09/24/are-china-and-russia-trying-to-undermine-the-us-dollar

China and Russia might very well be trying to weaken the US dollar however it isn't working. The Russian ruble is trading at 66 rubles to a single US dollar. China recently weakened its currency vs the US dollar. It either country is trying to weaken the US dollar it is backfiring on them.

[Manny]

Are China and Russia making moves against the dollar?

China, Russia and the Still-Almighty Dollar

http://www.usnews.com/news/articles/2015/09/24/are-china-and-russia-trying-to-undermine-the-us-dollar

China and Russia might very well be trying to weaken the US dollar however it isn't working. The Russian ruble is trading at 66 rubles to a single US dollar. China recently weakened its currency vs the US dollar. It either country is trying to weaken the US dollar it is backfiring on them.

It is not about bare exchange rates today or tomorrow. De-dollarisation is a long term project with long-term objectives.

If Russia and China (and other countries) reduce dollar usage, and dump dollar denominated instruments, as they are both doing, take a stab at what happens over time to the dollar?

[andrewfi]

Westcoast, you are falling into the naive trap about exchange rates that most uneducated people fall into.

If two currencies trade at a given value then it is safe to assume that the 'correct' value for each is the value at which it was last sold - makes sense, yes?

Of course the 'correct' value can change over time but not usually overnight, or in the space of seconds. That's why investors and speculators both look at the fundamentals of the objects in which they are planning to trade. (or seek out arbitrage opportunities for short term deals).

There have been no earthquakes in China, no outbreaks of Bubonic plague, no strikes by dock workers or iPhone assemblers at Foxconn.

The fundamentals are not changing rapidly in China - they ARE changing though.

So, the other side of the coin from your suggestion is that the US dollar is now overvalued in comparison to the other side of the deal - the renminbi (and ruble).
This is the part that most folks who trouser dollars don't get.
The Chinese (and Russians) as a matter of ongoing economic policy WANT an overvalued dollar in comparison to their domestic currencies.

There's lots of reasons for it but here's one: both countries hold large stocks of US dollars as cash or as paper obligations. If they want to de-dollarise, as both have said they do, then an overvalued dollar is an essential part of the overall strategy, at least for the time being. That's because now is the best time to get rid of their holdings of dollars. better yet, because the US is still working to a strong dollar strategy the Fed will continue to force the dollar to remain high even as the Russians and Chinese liquidate into what should be a falling market - falling because of the oversupply of dollars.

Look at what the Chinese and Russians are doing -they ARE liquidating dollar assets and their people are in the US buying up assets with their own dollar holdings. On top of that they are stocking up on gold, the price of which is being held down by the US.

Don't forget that the Chinese economy is still expanding at a furious rate, albeit lower than hitherto. The US economy: probably in recession when looking at 'real' data. Even Russia is doing better than 'experts' from the US reckon - for evidence: rail freight volume was up by almost 1% last month. That means the economy is not contracting but expanding - goods and raw materials travel by train in Russia and so gives a good forward indicator of the state of the economy, just as the Baltic Index does for global trade.
On the other hand, in the US, oil output is now falling, energy consumption is falling (again forward indicators of the economy) and Russia has overtaken the US to become the world's largest producer of crude oil and condensates.

The ONLY way for Russia and China to de-dollarise is to force the US into carrying an overvalued currency, not supported by fundamentals. If that process does not take place there is no way in which Russia and China can liquidate their dollar holdings in a cost effective manner.

Right now, the sensible domestic holder of dollars should be praying for the renminbi and ruble to appreciate - but US thought leaders won't allow that to happen.

[msmoby]

Westcoast, you are falling into the naive trap about exchange rates that most uneducated people fall into.


Of course the 'correct' value can change over time but not usually overnight, or in the space of seconds. That's why investors and speculators both look at the fundamentals of the objects in which they are planning to trade. (or seek out arbitrage opportunities for short term deals).




This is the part that most folks who trouser dollars don't get.
The Chinese (and Russians) as a matter of ongoing economic policy WANT an overvalued dollar in comparison to their domestic currencies.


Look at what the Chinese and Russians are doing -they ARE liquidating dollar assets and their people are in the US buying up assets with their own dollar holdings. On top of that they are stocking up on gold, the price of which is being held down by the US.

Don't forget that the Chinese economy is still expanding at a furious rate, albeit lower than hitherto. The US economy: probably in recession when looking at 'real' data. Even Russia is doing better than 'experts' from the US reckon - for evidence: rail freight volume was up by almost 1% last month. That means the economy is not contracting but expanding - goods and raw materials travel by train in Russia and so gives a good forward indicator of the state of the economy, just as the Baltic Index does for global trade.
On the other hand, in the US, oil output is now falling, energy consumption is falling (again forward indicators of the economy) and Russia has overtaken the US to become the world's largest producer of crude oil and condensates.

The ONLY way for Russia and China to de-dollarise is to force the US into carrying an overvalued currency, not supported by fundamentals. If that process does not take place there is no way in which Russia and China can liquidate their dollar holdings in a cost effective manner.

Right now, the sensible domestic holder of dollars should be praying for the renminbi and ruble to appreciate - but US thought leaders won't allow that to happen.

If andrewfi didn't forget what he had written elsewhere on this forum, a random passer by might nearly think he knew stuff about the real world..

In the meantime China buys and sells in dollars and your average Russian still realises that the Dollar has, historically, continued to earn them more money under the bed  - than keeping roubles in the bank..

The standard andrewfi response will be, '' I will be proven correct'' - but in the meantime - when he spins that something is on the up - thus proving his point - you can guarantee investing the opposite way from his recommendation earns real profit.

[WestCoast]

Westcoast, you are falling into the naive trap about exchange rates that most uneducated people fall into.

If two currencies trade at a given value then it is safe to assume that the 'correct' value for each is the value at which it was last sold - makes sense, yes?

Of course the 'correct' value can change over time but not usually overnight, or in the space of seconds. That's why investors and speculators both look at the fundamentals of the objects in which they are planning to trade. (or seek out arbitrage opportunities for short term deals).

There have been no earthquakes in China, no outbreaks of Bubonic plague, no strikes by dock workers or iPhone assemblers at Foxconn.

The fundamentals are not changing rapidly in China - they ARE changing though.

So, the other side of the coin from your suggestion is that the US dollar is now overvalued in comparison to the other side of the deal - the renminbi (and ruble).
This is the part that most folks who trouser dollars don't get.
The Chinese (and Russians) as a matter of ongoing economic policy WANT an overvalued dollar in comparison to their domestic currencies.

There's lots of reasons for it but here's one: both countries hold large stocks of US dollars as cash or as paper obligations. If they want to de-dollarise, as both have said they do, then an overvalued dollar is an essential part of the overall strategy, at least for the time being. That's because now is the best time to get rid of their holdings of dollars. better yet, because the US is still working to a strong dollar strategy the Fed will continue to force the dollar to remain high even as the Russians and Chinese liquidate into what should be a falling market - falling because of the oversupply of dollars.

Look at what the Chinese and Russians are doing -they ARE liquidating dollar assets and their people are in the US buying up assets with their own dollar holdings. On top of that they are stocking up on gold, the price of which is being held down by the US.

Don't forget that the Chinese economy is still expanding at a furious rate, albeit lower than hitherto. The US economy: probably in recession when looking at 'real' data. Even Russia is doing better than 'experts' from the US reckon - for evidence: rail freight volume was up by almost 1% last month. That means the economy is not contracting but expanding - goods and raw materials travel by train in Russia and so gives a good forward indicator of the state of the economy, just as the Baltic Index does for global trade.
On the other hand, in the US, oil output is now falling, energy consumption is falling (again forward indicators of the economy) and Russia has overtaken the US to become the world's largest producer of crude oil and condensates.

The ONLY way for Russia and China to de-dollarise is to force the US into carrying an overvalued currency, not supported by fundamentals. If that process does not take place there is no way in which Russia and China can liquidate their dollar holdings in a cost effective manner.

Right now, the sensible domestic holder of dollars should be praying for the renminbi and ruble to appreciate - but US thought leaders won't allow that to happen.

Andrew, the US has been saying for a long time that the yuan is undervalued against the US dollar. The Chinese government keeps the yuan in a tight trading range vs the US dollar. The US government wants the yuan to rise in value versus the US dollar.

If the value of the yuan rises vs the US dollar then Chinese made goods are more expensive in the US. Chinese manufacturing costs are more expensive for US companies doing business in China and there's a better chance that fewer US companies will outsource to China. If the yuan rises vs the US dollar then because of the higher cost of doing business in China some manufacturing by US companies in China will return to the US to manufacture their goods, creating jobs in the US and increasing US GDP.   

Andrew to put in plainly so you'll have no troubles understanding it, the US government would absolutely love for the value of the yuan to rise vs the US dollar. The US government does not want a cheap yuan, the Chinese government wants a cheap yuan vs the US dollar.

As for Russia, all that has to happen there is for oil to remain cheap and Russia's screwed. Russia receives somewhere around 68% of its foreign revenue from oil and natural gas. Russia's break even point for oil is quite high at about $105/barrel, if the price of oil remains low Russia has few options outside its borders. 

If the price of oil remains low how is Russia paying its foreign bills? Simple it's using its foreign currency holdings including presumably US dollars to pay the bills. About the only bright spot for Russia is that it has large gold deposits that can be mined and paid for in rubles. Is Russia stockpiling this gold or is it also using this mined gold to pay its bills? Probably no way to know. However, if the price of oil and natural gas remains well below $105/barrel for years then it's a pretty fair bet that Russia will have to mine all the precious metals it can find to pay for imports.


 

[Manny]

Is Russia stockpiling this gold or is it also using this mined gold to pay its bills? Probably no way to know.

Read and learn stuff.

Russia is buying gold. 31 tons in August. I linked it here already. They are aiming to have a currency backed by gold eventually and not trillions of debt as the US does. We used to call it the gold standard. I think we dropped it in the 30's.

The dollar is supported by nothing but confidence. Stop using it, remove the confidence, add the trillions of debt and...............

............no more American wars. 

What is the alternative? Sit back and watch America invade Africa next? South America again? Maybe one day it will be the EU. It needs to stop. De-dollarisation is the only peaceful way. American aggression around he world needs to be hemmed in. Vlad will sort out the mess the Yanks made with ISIS (watch the UN speech next week) and then a more multi-polar world will continue to develop.

[andrewfi]

Westy, old man, you are kinda making my point about lack of understanding AND about Chinese policy all at the same time and you don't understand why.

I can recommend some books to teach you the basics of FX if you wish.

Yes, the US would LIKE the yuan to be higher but as you missed, or did not understand, the devaluation of the yuan is Chinese policy. They made the choice to move the peg boundaries downward. US policy does not support a dollar at a lower rate.

As some folks say 'want without a plan = fantasy' well, it is true and it is how the US is managing its economic affairs right now.

The more overvalued the dollar becomes against key currencies the less useful it becomes to the users of those currencies as an intermediary.
The mopre volatile the dollar becomes in terms of those currencies the less useful it becomes as an intermediary currency to holders of other currencies.

Remember, and this is the bit you don't get (as an international banker I really don't get how you can not understand this stuff...): China WANTS an over valued dollar. (or more accurately a correctly valued dollar in yuan terms) Previously the yuan (renminbin) was overvalued, now the Chinese are slowly allowing the currency to find its 'natural' level, its market clearing price, if you like. Russia has been doing the same for about 4 years now and is broadly speaking, about where they want to be. China may go a little faster and take the risk of upsetting their citizens a little more than Russia was comfortable with.

You see, when the yuan was overvalued it was like giving the US free money, a discount on every purchase.
To make matters worse they were buying US debt and had little expectation of being able to get their money back. it was like a car dealer was giving the customer money to buy the car. It is OK as a special offer but it is no way to run a business long term.

The hullabaloo in China is an essential market reorientation combined with speculative meddling from the US - similar to that which happened in Russia (different techniques, same intent). The Chinese reacted as Russia did - accelerated their existing plans and now can blame the evil round eyes for causing the problems, just as happened in Russia.

Here's a prediction for you - the yuan will decline in value by another 20% before the Chinese call a halt to the proceedings. By that time almost all of Chinese dollar denominated paper and reserves will be gone - sold back to the US.

OH, when that happens the Chinese will have finished eating the heart out of US based manufacturing! I doubt there's any US manufacturer can survive with competition that is an additional 25% cheaper than it has been until recently.

[WestCoast]

Is Russia stockpiling this gold or is it also using this mined gold to pay its bills? Probably no way to know.

Read and learn stuff.

Russia is buying gold. 31 tons in August. I linked it here already. They are aiming to have a currency backed by gold eventually and not trillions of debt as the US does. We used to call it the gold standard. I think we dropped it in the 30's.

The dollar is supported by nothing but confidence. Stop using it, remove the confidence, add the trillions of debt and...............

............no more American wars. 

What is the alternative? Sit back and watch America invade Africa next? South America again? Maybe one day it will be the EU. It needs to stop. De-dollarisation is the only peaceful way. American aggression around he world needs to be hemmed in. Vlad will sort out the mess the Yanks made with ISIS (watch the UN speech next week) and then a more multi-polar world will continue to develop.

Manny what is Russia using to buy gold? There income from oil and natural gas is less than half what it was a year or 18 months ago. If Russia is buying gold with their foreign income than Russia is cutting back on other purchases of foreign goods. If Russia is using its FX to buy gold then they can't use the FX to support the ruble or buy other needed foreign goods.

Vlad will sort ISIS? How? Remember the Soviet Afghan war? How did that work out for the USSR? Russia has an economy less than 1/8th that of the US. Russia's partnership with China is going nowhere as is Russia's membership in the BRICS.

China hasn't recognized Russia's annexation of Crimea, neither has India or Brazil one would think that wouldn't be a problem for allies but China, India and Brazil don't want to risk losing trade with the US and EU

With regard to the BRICS, depending on how you define GDP Russia is the #3 or #4 economy. How much influence do you think Putin has in the BRICS when Russia is the #4 largest economy is a 5 member organization?

[Manny]

Manny what is Russia using to buy gold?

Dollars Westy. 

Vlad will sort ISIS? How?

With a coalition not led by the US. Do you read the non-US news?

Russia's partnership with China is going nowhere as is Russia's membership in the BRICS.

 

China hasn't recognized Russia's annexation of Crimea,

http://vineyardsaker.blogspot.co.uk/2014/11/official-china-recognises-crimean.html 

Put down the CNN/Fox/CBS Westy. Watch the New York UN meeting next week.

[JeanClaude]

Is Russia stockpiling this gold or is it also using this mined gold to pay its bills? Probably no way to know.

Read and learn stuff.

Russia is buying gold. 31 tons in August. I linked it here already. They are aiming to have a currency backed by gold eventually and not trillions of debt as the US does. We used to call it the gold standard. I think we dropped it in the 30's.

The dollar is supported by nothing but confidence. Stop using it, remove the confidence, add the trillions of debt and...............

............no more American wars. 

What is the alternative? Sit back and watch America invade Africa next? South America again? Maybe one day it will be the EU. It needs to stop. De-dollarisation is the only peaceful way. American aggression around he world needs to be hemmed in. Vlad will sort out the mess the Yanks made with ISIS (watch the UN speech next week) and then a more multi-polar world will continue to develop.

The 1930 thing was commie president FDR outlawing the private ownership of gold (otherwise face 10 year jail term). That confiscated gold went to Fort Knox. (probably not there anymore).

Nixon went of the gold standard in 1970.

Yup, Putin is planning 4 military bases in Syria.....  Instead of bombing Assad and  sponsoring "Syrian  rebels" (ISIS) ,he is actually helping him, you need ruthless secular dictators to keep that debased religion in check.

Americans choose a   ing incompetent retard as president, who wouldn't even be able to run a convenience store, or a mid-sized corporation for that matter.

[andrewfi]

Westcoast if you can't afford pay TV and the Internet pop over to the library and get some news sources. 

Westcoast, the gold buying,  using dollars.  That's de-dollarisation in action for you. A process MUCH more effective when the ruble/yuan  has declined in price relative to the dollar in which the asset is priced. It gets dollars out of the Russian central bank at a good rate of exchange and into an asset that functions as a store of wealth and has an intrinsic value even without a connection to the dollar. (one might argue why we place such store in gold but that's a discussion for a different time,  the world is what it is).

[JeanClaude]

Westcoast if you can't afford pay TV and the Internet pop over to the library and get some news sources. 

Westcoast, the gold buying,  using dollars.  That's de-dollarisation in action for you. A process MUCH more effective when the ruble/yuan  has declined in price relative to the dollar in which the asset is priced. It gets dollars out of the Russian central bank at a good rate of exchange and into an asset that functions as a store of wealth and has an intrinsic value even without a connection to the dollar. (one might argue why we place such store in gold but that's a discussion for a different time,  the world is what it is).

Economics 101,

I thought Westcoast was a banker, lol,.., or maybe his job got decommissioned a while back when they introduced ATM machines.

[WestCoast]

Yes, the US would LIKE the yuan to be higher but as you missed, or did not understand, the devaluation of the yuan is Chinese policy. They made the choice to move the peg boundaries downward.

True. China has said they will let the yuan float but recent problems with the Chinese economy have put a halt to those plans.

US policy does not support a dollar at a lower rate.

The US dollar floats unlike the yuan. For the most part the US economy and global economy set the US dollar rate against other currencies not the US government.

The more overvalued the dollar becomes against key currencies the less useful it becomes to the users of those currencies as an intermediary.

Ridiculous. Any of the major economies that do business with the US want the dollar to be overvalued against their currency. When the US dollar is trading at a high rate versus for example the euro, then trade goods from countries using the euro are cheaper in the US and those countries can sell more goods to the US.

The mopre volatile the dollar becomes in terms of those currencies the less useful it becomes as an intermediary currency to holders of other currencies.

Currently it's the euro and pound that are volatile rather than the dollar.

Remember, and this is the bit you don't get (as an international banker I really don't get how you can not understand this stuff...): China WANTS an over valued dollar. (or more accurately a correctly valued dollar in yuan terms) Previously the yuan (renminbin) was overvalued, now the Chinese are slowly allowing the currency to find its 'natural' level, its market clearing price, if you like.

Of course China wants a higher dollar vs the yuan so China will sell more goods and keep the Chinese economy strong. The Chinese government is strictly controlling the yuan so it can't be finding its 'natural' level. The yuan's exchange rate vs the US dollar is what the Chinese government says it is.

Russia has been doing the same for about 4 years now and is broadly speaking, about where they want to be. China may go a little faster and take the risk of upsetting their citizens a little more than Russia was comfortable with.

So you're saying Putin wants the ruble trading at 67 rubles to 1 US dollar? I'd really like to see the details of this master plan of his.

You see, when the yuan was overvalued it was like giving the US free money, a discount on every purchase.
To make matters worse they were buying US debt and had little expectation of being able to get their money back. it was like a car dealer was giving the customer money to buy the car. It is OK as a special offer but it is no way to run a business long term.

Mentioned above, of course China wants a weak yuan vs the US dollar, it's how China stays in business.

Here's a prediction for you - the yuan will decline in value by another 20% before the Chinese call a halt to the proceedings. By that time almost all of Chinese dollar denominated paper and reserves will be gone - sold back to the US.

OH, when that happens the Chinese will have finished eating the heart out of US based manufacturing! I doubt there's any US manufacturer can survive with competition that is an additional 25% cheaper than it has been until recently.

How much you want to bet Andrew? Over how long a period of time? One year?  If China cuts the value of the yuan by 20% due solely to currency manipulation by the Chinese government that would put the yuan at about 5 to 1 US dollar.

 current value yuan x 0.80 = new value yuan
     6.37452 x 0.80 = 5.099616

The US, Japan, EU and probably a number of other countries would enact some types tariffs on Chinese goods. 

Some reports say the Chinese economy is in big trouble. China's stock market is crashing and China is trying to stop the decline in the value of stocks and in the value of government and privately held companies. If the Chinese economy crashed, went into a depression then the yuan might go to 5 to 1 US dollar, otherwise not a chance.

[msmoby]

China hasn't recognized Russia's annexation of Crimea,

http://vineyardsaker.blogspot.co.uk/2014/11/official-china-recognises-crimean.html 

Put down the CNN/Fox/CBS Westy. Watch the New York UN meeting next week.

Manny,

China CANNOT recognise Crimea's 'referendum', lest it sets a precedent for the Taiwan 'problem' ...History 101...

[WestCoast]

Westcoast, the gold buying,  using dollars. 

Andrew, Manny gold is priced in US dollars. For example, if Russia uses $100 million of its US dollars foreign reserves to buy gold, Russia has just traded US dollars for a commodity traded in US dollars. Russia still has $100 million in US dollars, Russia has simply traded US dollars for a commodity priced and traded in US dollars. This is true even if Russia buys the gold from India.

http://money.cnn.com/data/commodities/