Tuesday, June 01, 2010

China Denies Speculation about Diversifying from Euros; Oil in Euros Revisited; No Good Currency Choice Except Gold

A year ago the talk of the town was how governments would abandon the US dollar in favor of Euros and this would be the death of the dollar. At that time China denied speculation it was diversifying out of the dollar. Look at how things change.

Now China denies speculation is it diversifying out of Euros. Please consider China Euro Policy Denial Prompts Detection of Changes. http://www.bloomberg.com/apps/news?pid= ... Re5k&pos=5

The euro weakened 2.4 percent against the dollar last week even after China’s State Administration of Foreign Exchange, which manages the country’s $2.4 trillion of reserves, denied speculation that it was diversifying away from European bonds. The 20 percent depreciation from last year’s peak in November has demonstrated the limits of the euro as a reserve currency to rival the dollar as well as the European Central Bank’s ability to defend its legal tender.

A net 105 billion euros ($129 billion) flowed out of the region’s fixed-income markets on an annualized basis in the first three months of the year, signaling a “broad shiftâ€