Sunday, 8 December 2013

Chinese Yuan became the second most traded currency

The biggest news this week in economy is that Chinese Yuan has become the second most traded currency, rising from about 1% last year to around 9% now overtaking the Euro which drops from 8% last year to 6% now. That also means that the volume of Yuan increase was taken from the current world trading currency the US dollars.

My prediction, which is just common sense, is that the Chinese Yuan will increase its share as a trading currency in the coming years until it overtakes the US dollars by 2020 latest or many be even earlier. For those who can save money in Chinese Yuan, it is a safe bet that the Chinese Yuan will continue to increase in value at a rate better than inflation in the long run.

There are scepticism outside China about the stability of China. I don't see that a possibility as long as the Chinese government can maintain a reasonable grow. There are still a lot of people in poverty in China and these people are desperate to get a share of the economic development enjoyed by the people in the open cities. This remains one of the biggest challenge for the Chinese government, but I have confidence that they will be able to manage. My optimism is based on how the current leaders of the Chinese government have risen to power - through demonstrated ability of leadership in large corporations and/or different levels of government. Ruling 1.2 billion people is not an easy task, but they have 2000 years of history to refer to.

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