China, Russia quit dollar

Su Qiang and Li Xiaokun
AsiaOne Business

St. Petersburg, Russia - China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.

Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.

"About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.


The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.

The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.

"That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries," he said.

Putin made his remarks after a meeting with Wen. They also officiated at a signing ceremony for 12 documents, including energy cooperation.

The documents covered cooperation on aviation, railroad construction, customs, protecting intellectual property, culture and a joint communiqu. Details of the documents have yet to be released.

Putin said one of the pacts between the two countries is about the purchase of two nuclear reactors from Russia by China's Tianwan nuclear power plant, the most advanced nuclear power complex in China.

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Paul Says '12 Run Depends on the Fall of the U.S. Dollar

Lindsey Boerma
National Journal

Texas Rep. Ron Paul (R) told reporters Saturday that the bulk of the economic crisis is yet to come, and that a White House '12 bid largely hinges on his anticipated fall of the U.S. dollar.

Prior to appearing before the Virginia Tea Party Patriots Convention in Richmond, Paul called a complete implosion of the U.S. currency system "95% likely... [because] right now the whole world is racing to beat their currencies because they think it's going to help trade...But let me tell you, if the bombs started to fall on Iran, hold your hat, because that would be, I believe, the end of our dollar system. And we would have a real skirmish to find out what we're going to replace this government with."

Paul's "End of Dollar Hegemony" is nothing we haven't heard before from the Congressman, but at this point it's largely indicative of his decision to run for president in '12. He is slated to speak at the University of Iowa later this month, an appearance many pundits have pegged as his first WH stump in the critical caucus state. He denied that rumor today, saying, "I don't any precise plans for 2012. I don't have an organization [in Iowa], and there are some who are very well organized. It's a long way off, and events can change quickly, and I believe sincerely we're moving toward a much more major economic crisis. Depending on where we are on that might help me make that decision."

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Dollar set for sharp decline, Goldman forecasts

The dollar will embark on a sharp decline over the next 12 months, Goldman Sachs forecast on Wednesday, as policy makers in Washington look poised to press the trigger on another round of printing money.

Richard Blackden
Telegraph

The investment bank expects the dollar to drop to $1.79 against the pound in six months and $1.85 in 12 months. Sterling closed at $1.5891 in London yesterday. The euro won’t be spared either, with the dollar’s slump forcing it to $1.50 six months from now and $1.55 in a year’s time.

Powered by President Obama’s stimulus package and a rebound in inventories, the US recovery peaked in the final three months of last year and has been slowing ever since.

As the summer delivered a diet of weak economic data, the conviction has strengthened among a growing number of officials at the Federal Reserve that it should risk another bout of quantitative easing - printing money to inject into the economy.

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