Yesterday I opined on the needless hysteria surrounding the Brazil/China currency “breakthrough”. The august Macro Man blog agrees with your humble scribe…
While Macro Man can certainly see the growing drumbeat of dollar bearishness in certain circles, he can’t help but think that the bark is worse than the bite. Oh, sure, the press is making hay out of things like Brazil and China deciding to trade in…err…their own currencies, rather than somebody else’s. But to Macro Man, that’s little more than the economic equivalent of taking the training wheels off of one’s bicycle.
He wonders what China’s reaction would be if the US inquired about gaining the capability of purchasing RMB on the open market to settle their import bills in yuan. He suspects that that answer would rhyme strongly with “thanks, but no thanks.” As such, he continues to have a hard time getting excited about the ‘death of the dollar’ theme so beloved in certain circles….
That is not to say I’m bullish on the dollar. I’m not. But I’m far from convinced China will do more than bark as far as the dollar is concerned.
