As if the dollar needed any more rattling on Tuesday (chart courtesy of CNBC):
We now hear via Caijing Magazine that China is planning to sell up to 6bn worth of yuan-denominated sovereign bonds in Hong Kong – the first sovereign sale of its kind in an offshore market.
The move, Caijing reports, is supposed to help develop the city’s bond market and push for wider international use of the yuan currency.
Meanwhile, in case you were tempted to disassociate gold’s $1000-breakthrough from any possible “liquidity fears” hitting the market, the following view from Stephen Lewis at Monument Securities might be of interest:
More likely, the reason why gold finds favour is that the opportunity cost of holding it is uniquely low. The standard argument against gold as an investment is that it does not provide an income. But nowadays that is true of bank deposits and short-dated government bonds also. Investors may well wonder why they should not diversify into gold and gain some insurance against the risk that the new-fangled policies of the central banks result in the collapse of paper currencies. The liquidity that the central banks are creating provides the fuel for gold’s ascent. Central bankers should take the firmness in the prices of gold and oil, despite unfavourable fundamentals, as a warning that their policies are failing to generate firmly-based confidence in a stable economy. Related links:
Hong Kong hauls over the gold – FT Alphaville
UN weighs in on the dollar-reserve debate – FT Alphaville