Chinese Yuan To Take Place of Dollar as Global Reserve Currency?

Yes yes, it may be true, the dollar’s decline from whenever you want to blame it on, whichever president, whichever individual crisis, the dollar has become the ugly chick at the school dance that no one wants to dance with.  According to a high ranking bank official in Russia, to keep up with it’s quick ascendancy after being depeggged from the USD earlier this year.  China has amassed untold trillions in Forex reserves alone, making the currency a lucrative and affordable bet for anyone looking to invest in a currency that is bound to go anywhere except down.

“The Chinese yuan will become a global reserve currency to reflect China’s growing economic clout, Victor Melnikov, deputy head of the Russian central bank , was quoted by the official Xinhua news agency as saying on Wednesday.”   Read More

http://risingpowers.foreignpolicyblogs.com/2009/05/14/focus-on-chinas-currency-and-its-rise/

China’s Foreign Exchange Reserves Fall in 2008

Looks like the worldwide recession is starting to effect China’s Forex Reserves as well.  It was reported this weekend that China’s foreign exchange reserves have declined for the first time since 2003 after reaching $1.9 trillion at the end of September 2008.  China’s amount of reserves has been rising by hundreds of percent annually and this recent decline may indicate further slipping of the vast amount of reserves the country had amassed.

This chart displays how the Yuan has been gaining on the US Dollar for months and in recent weeks has levelled out.  The recent dollar strength can be seen not only against the Yuan, but many other currencies.

((http://www.chinadaily.com.cn/china/2008-12/24/content_7335345.htm))

One party official attributed the decline in forex reserves to the slowdown in appreciation of the Yuan against many currencies and the short-term depreciation of the Yuan against the USD.  It is also due to the increase of foriegn investment by Chinese companies leaving less money in the hands of investors.