*The original articles of Netease Financial Think Tank should be reproduced with authorization. This article does not constitute an investment decision.
Tan Yaling (Independent economist of China Foreign Exchange Investment Research Institute)
60s quick reading:
1. At present, market liquidity surplus is still a reality, even if more Central Bank Tight money is in full swing, but compared with money supply, including fiscal and investment supply, it is obvious that the money supply exceeds the economic reality, and the root cause of the financial crisis and debt crisis is the imbalance of macro management policies.
2. The Federal Reserve is raising interest rates to protect US debt The defensive measures of security and yield are not a reference for short-term market to follow the market, but a protective strategy for the core national interests of the United States. In comparison, the euro is the biggest concern of the dollar, and also the only basket currency that can compete with the dollar.
3. At present Dedollarization It is a risk path, not a trend or trend normalization option. Whether there are vertical factors in the market exaggeration argument is the warning policy. Long term and short term mismatch speculation is the main reason. This or the real motivation and force behind public opinion and emotion needs to be vigilant against risk crisis force majeure is the key period and also the key pressure.
Body:
With the focus of public opinion on de dollarization in the market, I am considering the fact that the current stable position of the dollar is a fact, whether foreign exchange reserve , trade settlement, trading system, and asset and commodity markets. There is no doubt that the United States dollar is the dominant one. The problem is that the system, mechanism and system of de dollarization have a solid cycle logic and proportion. Where is de dollarization reflected? How to dollarize?
Although the current bilateral settlement method in some parts of the world is a tool or means to resist the US dollar, it is far from de dollarization, and even in the current era of globalization and restructuring, restructuring of the trading system, and convergence of multilateral relations, the US dollar is precisely targeting its competitors, so as to facilitate the safe operation of the US dollar.
So far, whether more simple ideas of de dollarization and the popularity of public opinion have led to the targeting of the US dollar, which is worth pondering over in the current era of strong world economic turbulence and recession, constant deviation in international financial turmoil, complex and volatile geographical relations such as international trade, and whether national security and international defense security are strengthened or weakened.
On the one hand, the biased expectation of de dollarization has the risk of speculation. At present, excess liquidity in the market is still a reality. Even though more central banks are tightening money in intensive operation, compared with money supply, including fiscal and investment investment, it is obvious that the money supply exceeds the economic reality, and the financial crisis and debt crisis are rooted in the imbalance of macro management policies. Therefore, it is a reality that speculation dominates the financial market. The repeated flow of capital in and out of emerging market countries is enough to show that speculation is free and uncertain, which is the biggest risk of de dollarization. At present, the dominant force in the market is still the US dollar, which accounts for more than 80% of international trade settlement, more than 88.5% of international foreign exchange transactions, and more than 90% of international derivatives investment.
Although the international foreign exchange reserves are the focus of the speculation of de dollarization, that is, the proportion of dollars dropped from 71% in 1999 to 59%, which is the only "evidence" of de dollarization. However, among the international foreign exchange reserves, on the one hand, the IMF announced on June 28, 2013 that the Australian dollar and Canadian dollar were included in the foreign exchange reserves for the first time. Previously, these two currencies were classified as "other currencies". At that time, when the global central bank dollar reserves increased to US $3.76 trillion or 62.2%, the proportion of the euro in foreign exchange reserves fell from 24.3% to 23.7%, and the proportion of the yen in foreign exchange reserves fell from 4% to 3.9%. The increase in the proportion of global currencies was the reality of the decrease in the share of the dollar, which may also cause the blind spot and miscalculation of the current de dollarization. Even though the US dollar accounts for 59% and less than 60% of the global foreign exchange reserves, it is still the world's first reserve currency. On the other hand Depreciation of the dollar The "reason" for the weakening or de dollarization of the Chinese currency is also the reason and evidence of speculation between the public opinion and sentiment of selling US bonds and increasing gold reserves. In fact, the key problem may not be the US dollar, but the internal structure of each country. Among them, the public opinion of selling US debt is that the US debt is no longer held when it is due, which is not an early settlement. Inappropriate wording of selling is likely to cause de dollarization.
The so-called reason for selling off US debt countries is mainly due to the adjustment of internal reserve structure, or the existence of economic pressure and development difficulties. In fact, the yield of the US debt raised by the Federal Reserve. The yield and liquidity of the US debt are still attractive. As for security, or because the US debt is huge and unbearable, the US dollar share of the above argument may not be the unbearable future of the US.
The United States is borrowing money to make a living, which is a cycle mechanism and logic with American characteristics. In order to ensure long-term sustainability, the latest proposal of U.S. Treasury Secretary Yellen will raise the ceiling of the national debt to $51 trillion until 2033. The long-term plan of the United States also reflects the precise response of the United States. The essence of the problem is clear at a glance. The speculation of de dollarization is a risk, not an opportunity or an appropriate time.
On the other hand, the benchmarking of monetary competition focus has clear planning risks. The dollar is the lifeline of the United States and the lifeblood of the national credit endorsement of the United States Treasury. The interest rate increase of the Federal Reserve is a defensive measure to protect the security and yield of US debt, which is not a reference for short-term market to follow the trend of the market, but a protective strategy of the core national interests of the United States. In comparison, the euro is the biggest concern of the dollar, and also the only basket currency that can compete with the dollar.
Therefore, looking back at the history of the euro before and after its introduction and 24 years of operation, it is not difficult to find that the euro overvalued its exchange rate (starting at $1.17), suppressed its devaluation (the lowest level of $0.82), rose to a high level (the highest level of $1.60) and the European debt crisis ($1.18), So far, the risk of euro inflation is obviously different from the risk of stagflation of the economy. The risk focus of the dollar or other basket currencies is obvious, in which the dollar actively controls and manipulates the euro market. The appreciation of the euro is subject to the devaluation of the dollar, while the devaluation of the dollar comes from the appreciation of the euro. The active and passive relationship between the dollar and the euro is obvious. There are six basket currencies allocated by the dollar index, and the euro accounts for 57.6%. The control of the euro by the dollar has been in place since the advent of the euro.
After all, the independence of the euro currency and the differentiation of policies are realistic problems. What's more, the finance, economy and finance are all in the framework of a single currency. The euro mechanism is incomplete and has the intention and purpose of being attacked by the US dollar against the target. In fact, the possible force of de dollarization is mainly the euro, and the key that the dollar cares about is the euro. However, the weakness and weakness of the euro are accompanied by the situation in Russia and Ukraine, which increases the risk of cooperation being difficult to operate. The death of the dollar to the euro is an urgent matter for the dollar, and also an imminent structural variable that may occur.
On the contrary, compared with emerging market currencies, whether the ruble or the RMB is hyped as a currency of de dollarization, it is clear that the risks outweigh the opportunities when looking at fortune or disaster or through the euro. As the number one currency in the world, the US dollar knows its own risks, and its resistance and suppression of potentially competitive currencies are the actions of the US national security and currency. From this, we can imagine that the path of market public opinion is to resist the US dollar, or to increase the insecurity coefficient of its own currency or not to say much.
Dedollarization has nothing to do with bilateral currencies. It is not a logic of hierarchical comparability, nor is it a currency with considerable strength that can be hedged. The goal and purpose of the market to magnify bilateral monetary factors is extremely dangerous. This can not only achieve the purpose of overvaluation of the exchange rate level of the bilateral monetary supply, which is a disaster for the economy, but also clarify the design of the currency targeting strategy with the benchmark US dollar. It can be said that the market is more alert to settlement risks than ever before.
In short, de dollarization is currently a risk path, not a trend or trend normalization option. Whether there are vertical factors in the market exaggeration argument is the warning policy. Long term and short term mismatch speculation is the main reason. This or the real motivation and force behind public opinion and emotion needs to be vigilant against risk crisis force majeure is the key period and also the key pressure.
Produced by Netease Financial Think Tank (WeChat official account: wyyjj163)
Netease Financial Think Tank It is a financial professional think tank built by NetEase News, integrating NetEase's original multimedia matrix, relying on the wisdom of hundreds of top economists at home and abroad, making rational and objective analysis and interpretation of hot economic topics, and creating a cutting-edge financial think tank with attitude. Welcome contributions (submission email: cehuazu2016@163.com ）。
