Venezuela Ditches US Dollar, Will Use Euros For International Trade

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Venezuela has just taken the next step in its quest to “free” itself from the tyranny of US dollar hegemony. One year after the country said it would stop accepting US dollars as payment for its (ever shrinking) oil exports (saying the country’s state-run oil company would accept payment in yuan instead), Venezuelan Vice President for Economy Tareck El Aissami said Tuesday that Venezuela will officially purge the dollar from its exchange market in favor of euros. Continue reading

An end to the dollar’s global hegemony? The Kremlin sees an opportunity.

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An exchange-office screen on a Moscow street shows the currency exchange rate of the Russian ruble and US dollar in April. The Kremlin has begun making moves to insulate the Russian economy from escalating US sanctions. (Pavel Golovkin/AP)

 

The dollar has long been the world’s reserve currency. But some countries, angered by sanctions, are challenging that status, potentially undermining one of the US’s most influential tools for shaping global policy.

For average Russians, a small personal hoard of US dollars has always represented a place of safety amid the wild ups-and-downs that continue to beset the country’s national currency, the ruble.

So it triggered a touch of panic among them when the Russian government confirmed long-standing rumors that it is working on a plan to insulate the economy from escalating US sanctions through “de-dollarization.” Continue reading

Iran Sanctions Are Damaging The Dollar

Iran

 

Painful sanctions on Iran have demonstrated the long reach of the U.S. Treasury, forcing much of the globe to fall in line and cut oil imports from Iran despite widespread disagreement over the policy. Yet, we are only in the first few chapters of what may ultimately be a long story that ends with the erosion of the power of the U.S. dollar.

The role of the greenback in the international financial system is the reason why the U.S. can prevent much of the world from buying oil from Iran. Oil is traded in dollars, and so much of international commerce is based in dollars. In fact, as much as 88 percent of all foreign exchange trades involve the greenback. Continue reading

The Tectonic Plates of Geopolitics Are Starting to Shift

The United States is currently waging economic warfare against one tenth of the world’s countries with cumulative population of nearly 2 billion people and combined gross domestic product (GDP) of more than $15 trillion.

These include Russia, Iran, Venezuela, Cuba, Sudan, Zimbabwe, Myanmar, the Democratic Republic of Congo, North Korea and others on which Washington has imposed sanctions over the years, but also countries like China, Pakistan and Turkey which are not under full sanctions but rather targets of other punitive economic measures.

In addition, thousands of individuals from scores of countries are included in the Treasury Department’s list of Specially Designated Nationals who are effectively blocked from the U.S.-dominated global financial system. Many of those designated are either part of or closely linked to their countries’ leadership…

But in recent months it seems that America’s unwavering commitment to fight all of the world’s scourges has brought all those governments and the wealthy individuals who support them to a critical mass, joining forces to create a parallel financial system which would be out of reach of America’s long arm. Should they succeed, the impact on America’s global posture would be transformational.

– From the recent article: The Anti-Dollar Awakening Could Be Ruder and Sooner Than Most Economists Predict

The peak of American empire has already come and gone, a reality not yet widely appreciated due to the continued dominance of the global financial system by the U.S. dollar, still the world’s preeminent reserve currency. U.S. leaders have always used the USD as a weapon, but it’s only in recent years that geopolitical rivals and long-standing allies alike have started to come to an increasingly vocal understanding that the unipolar role played by the U.S. in the world’s centralized financial system is well past its expiration date. Continue reading

Russell Napier: “Trade War Is The Beginning Of A New Global Monetary System”

A Country Matures, An Exchange Rate Declines

After two weeks on the road visiting clients your analyst returns with a better view of the consensus outlook. There is, though, much in the consensus to disagree with. In particular it seems peculiar that the consensus believes the democratically elected government of Italy, with policies entirely contrary to EU membership, will be put through the bureaucratic meat grinder in Rome and Brussels and turned into EU sausage, in a similar process that minced the political representatives of Greece.

While this might well be the case, it is hard to understand that the grinding destruction of this democracy, even if it is only moderate compared to the Greek experience, can be anything but bad for growth and asset prices in the EU. Disciplining these politicians to abandon their manifesto promises and follow the ways of the EU is highly unlikely to be a painless experience, either for Italy or the rest of the EU. Nonetheless, investors are content to believe that a painless disciplining of Italy’s elected representatives is all but inevitable. We shall see.

Perhaps the most prevailing consensus view is that the recent weakness of the RMB represents a Chinese counter-punch in the trade war with the US. Coming when it does, it is easy to see the accelerated decline of the RMB as a tactical and not a strategic move. Comments by the PBOC on July 3rd have probably reassured many investors that the managed exchange rate regime is not at risk and that the RMB will continue to be managed against a basket of currencies. Your analyst does not agree. Continue reading

China Has Quietly Implemented A 6% Across The Board ‘Tariff’ On All US Imports

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Nothing happens by accident in China and this massive drop in the value of the Yuan mirrors the violent devaluation, snap in 2015…

 

Trump and Xi have spent much of the last few weeks tossing tariff grenades across the Pacific Ocean as retaliatory retaliations grow ever stronger in rhetoric and potential escalations.

Then this week, Trump seemed to back away from his most serious threats (direct Chinese investment restrictions).

We wonder if this is why… Continue reading

Russia Finance Minister: We Are Ready To Ditch The Dollar In Favor Of The Euro

In a testament to the success of the latest Trump sanctions against Russia, overnight Russian aluminum giant Rusal announced that its chief executive, Aleksandra Buriko, and half of its managerial board resigned to make sure the firm avoids U.S. sanctions against its founder, billionaire oligarch, Oleg Deripaska. The mass resignations were part of “the efforts that have been made by the management of the group to protect the interests of the company and its shareholders” since the sanctions were imposed last month, Rusal said in a May 24 statement.

Continue reading

Gold Leaving US Vaults: Signs of Upcoming Currency War and Armed Conflict

Gold Leaving US Vaults: Signs of Upcoming Currency War and Armed Conflict

 

The Turkish government has made the decision to repatriate all of its gold reserves that are currently housed in the US Federal Reserve System (FRS). Overall Turkey was storing 220 tonnes, valued at $25.3 billion, in the US, which it repossessed on April 19, 2018.

Turkey’s President Recep Tayyip Erdogan has toughened his stance against the US dollar (USD), declaring that international loans should be made in gold instead of the American currency. Ankara is seeking to reduce dependence on the US financial system. The gold’s homecoming was partly prompted by the US threats to impose sanctions if Turkey goes through with the signed deal to purchase Russian S-400 missile defense systems. Continue reading

Iran Officially Switches From Dollar To Euro

 

Just two weeks after “panic” hit the streets of Tehran as the Iranian government attempted to ‘fix’ the freefall of the Rial against the US Dollar…

Middle East Monitor reports that Iran’s feud with the US is set to get worse after Tehran announced this week that it will start reporting foreign currency amounts in euros rather than US dollars, as part of the country’s effort to reduce its reliance on the American currency due to political tension with Washington. Continue reading

Venezuela Publishes Oil Prices in Chinese Yuan, Snubbing the ‘Tyranny of the Dollar’

 

Could this trend lead to the erosion of the dollar’s reserve-currency status?

On September 15, Venezuela began to publish prices for its oil in the Chinese yuan rather than in United States dollars, following President Nicolás Maduro’s promise earlier in the month to rid the South American country’s economy of the “tyranny of the dollar.” News emerged on September 13 that Venezuela was telling oil traders that it will stop receiving or sending payments in dollars.

The Venezuelan Oil Ministry published a statement about the decision to publish prices in yuan, saying, “This format is the result of the announcement made on September 7 by the president [Maduro] … that Venezuela will implement new strategies to free the country from the tyranny of the dollar.”

Continue reading

Deutsche: The Fed Has Created “Universal Basic Income For The Rich” And Now It Can’t Get Out

 

Two weeks after Aleksandar Kocic highlighted the moment in 2012 when the market stopped caring about newsflow and reality, and, in a word “broke” with pervasive complacency setting in regardless of macro uncertainty…

… Deutsche Bank’s post modernist master of stream-of-consciousness narrative is back with a new essay dissecting his favorite topic, the interplay between the Fed and markets, the so-called “umbilical limbo” that connects the two in the form of ultraeasy monetary policy and QE in general, and more importantly, the narrative that the Fed has spun over the past ten years, which while supportive of risk assets, has concurrently resulted in what Kocic calls a “permanent state of exception” from normalcy as a result of the Fed decision to defer the financial crisis indefinitely. Continue reading

Yellen’s Shocking Announcement: The $USD is TOAST

 

Fed Chair Janet Yellen just announced that the Fed will be kicking the $USD off a cliff.

She didn’t use those words, but the words she did use weren’t all that different.

But first a little context… Continue reading

‘The pound is IRRELEVANT’ German financial giant Deutsche Bank in shocking Sterling swipe

Deutsche Bank

Deutsche Bank branded the pound ‘irrelevant’ [GETTY•ALAMY]

 

Britain’s currency is permanently tarred after the UK voted to leave the European Union (EU), according to one of the bank’s foreign exchange strategists.

As a result, the pound is set to lose its prized status as a leading international safe haven currency, said Robin Winklertold. Continue reading

Dollar to hit parity with euro in 2017

 

The dollar is likely to hit parity with the euro during 2017 driven by diverging paths for interest rates, according to Goldman Sachs’ chief economist.

The Federal Reserve is likely to hike interest rates three times in 2017, pushing it even further from the rate positioning stance of Europe during the course of the year, Jan Hatzius told CNBC at the Goldman Sachs Strategy Conference in London on Monday. Continue reading

EURO PLUNGE: Single currency could ‘COLLAPSE’ against dollar amid record losing streak

Investors have frantically dumped the single currency over 10 consecutive trading sessions – the worst performance since the euro was introduced in 1999.

Head of the European Central Bank (ECB) Mario Draghi failed to ease fears after warning that the eurozone recovery depends on action by monetary policymakers. Continue reading