China’s Renminbi is now IMF’s reserve currency

The world is really changing for the better. Renminbi (RMB) will join IMF’s basket of currency reserves. This meant it is now on the same level as US dollar (THE MOST USED), Euro, Yen (Japanese) and Pound. The last change made to this basket was in 2000, when the Euro replaced the German mark and French franc. My dear Bank Negara Malaysia (BNM) governor said something very important as reported in some media today. She said, “Of course, the US dollar will still be the dominant currency, but having others like the euro, yen, sterling and now yuan (RMB), is an important development.”
This will provide a much needed stability to the international monetary system. To understand this, please also understand China is already the second largest economy PLUS it has the largest foreign reserves of the world and does have a continuous TRADE DEFICIT for years. Somehow many investors just fail to notice this and kept buying ‘expectations’ instead of the real underlying performance of today.
Anyway, BNM’s Zeti said that RMB is already at a level that Malaysia is comfortable with and we are definitely looking for further opportunities with the RMB. It said that BNM is also promoting awareness among importers and exporters on how they can benefit from greater use of RMB and not be subjected to volatility of “third currency” in bilateral trade. Be honest, the third currency is just one other currency acknowledged as the best. It’s time for better stability and the world should be using just one “third currency.” After all, we should never be held ransom by any single currency of the world today.
Oh yeah, last but not least, I seriously hope that the Federal Reserve of US would really start normalising the interest rates in December. Yes, this month please. Stop all the expectations from the market and just do it since there are already some signs that the economy is doing better. Read here: I hate it when US economy has bad news To those who believes Ringgit is still on the way down versus the US$, do hedge against this ok. Don’t just talk and then do nothing. As for me, I remain stubbornly supportive of undervalued stocks WITHIN Malaysia. Haha. Happy investing!
written on 1 Dec 2015
Next suggested article: Zeti: GDP up 4.7% for Q3, ringgit significantly undervalued


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