Dear CIGAs,
The article below is another indication of the fact that China in their traditional gradual manner is moving slowly away from the US dollar and towards convertibility for the Yuan for business settlements. The long term effect will be bearish for the dollar and bullish for gold.
Respectfully yours,
Monty Guild
www.GuildInvestment.com
China to allow freer yuan trades
Thursday, 25 December 2008
China has said it is to allow some trade with its neighbours to be settled with its currency, the yuan.
The pilot scheme was announced in a package of measures designed to help exporters hit by the global downturn.
It means if the two parties to a trade have yuan available, they need not enter world exchange markets to pay.
Most of China’s foreign trade is settled in US dollars or the euro, leaving exporters vulnerable to exchange rate fluctuations.
The yuan is not yet a freely convertible currency.
Officials did not say when the trial scheme would start.
When it does, the yuan could be used to settle trade between parts of eastern China (Guangdong and the Yangtze River delta) and the territories of Hong Kong and Macau, and between south-west China (Guangxi and Yunnan) and the Asean group of countries (Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam).
