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China, Russia start pushing dollar out of trade 'within weeks'
Yuan Trading Against Russian Ruble Said to Start Within Weeks in Shanghai
By Artyom Danielyan and Emma O'Brien
Bloomberg News
Wednesday, September 8, 2010
http://www.bloomberg.com/news/2010-09-08/china-russia-push-yuan-ruble-tr...
China and Russia plan to start trading in each other's currencies as the world's second-biggest energy consumer and the largest energy supplier seek to diminish the dollar's role in global trade.
China may start trading its currency against the ruble within weeks, three bankers with knowledge of the matter told Bloomberg, and sent out a document last week allowing lenders to apply for ruble trading licenses, one of them said. Russia's Micex Stock Exchange is making preparations to trade the ruble against the yuan in an initiative that has the backing of the country's central bank, Ruben Aganbegyan, the head of the bourse, told reporters at a conference in Moscow today.
... Dispatch continues below ...
Prophecy to Become Coal Producer This Year
with 1.5 Billion Tonnes of Resource
Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen.
For Prophecy's complete press release about its production plans, please visit:
http://www.prophecyresource.com/news_2010_may11.php
"Given the risk to the dollar and U.S. assets from their fiscal position they want to reduce their dependence on the dollar as an invoicing currency," Bhanu Baweja, global head of emerging markets fixed income, currency, and credit research at UBS AG, said in a telephone interview from London. "It makes sense for two large economies to exclude a third, overly dominant economy from their trading equation."
In the wake of the global financial crisis, which forced the U.S. economy into recession, both China and Russia have called for the dollar's role in the financial system to be diluted. Volatility in major currencies is putting the global recovery at risk Zhang Ping, the head of China's National Development and Reform Commission, said last month. President Dmitry Medvedev last year suggested Russia, holder of the world's third-largest foreign-currency reserves, reduce its holdings of dollars.
The yuan slid 0.06 percent to 6.7953 per dollar today paring its gains since the central bank ended a two-year dollar peg on June 19 to 0.4 percent. Russia's ruble weakened 0.3 percent to 30.9225 per dollar by 2:15 p.m. in Moscow today, and has fallen 2.1 percent versus the greenback so far this year.
The euro gained 0.2 percent to 1.2712 per dollar today, and jumped 2.5 percent against the U.S. currency last year.
The People's Bank of China started yuan trading against the Malaysian ringgit between banks on Aug. 19. It already allows trading of the renminbi versus the dollar, the Hong Kong dollar, Japanese yen and the euro on its interbank market and China’s Foreign Exchange Trading Center provides daily reference rates for these currencies. The yuan is a non-deliverable currency that is managed by the central bank to prevent volatility.
The ruble, which Bank Rossii targets against a dollar-euro basket, is a "fully convertible" currency and some Chinese banks have already been allowed to open ruble trading accounts, Russia's Deputy Finance Minister Dmitry Pankin told reporters in Moscow today. The opening of cross-currency trade between the yuan and the ruble is more important for China, he said. "They are gradually allowing more currency operations with yuan," he said.
China overtook Germany as Russia's second-largest trading partner in the first six months of the year, helped by exports of Russian commodities such as aluminum, nickel, and oil and gas. Trade between China and Russia jumped 50 percent to $30.7 billion in the first seven months of this year, compared with the same period in 2009, China's Ministry of Commerce said in a statement on Aug. 21.
The world's fastest-growing economy is seeking to eliminate the need to convert yuan holdings in to dollars before converting in to rubles to pay for Russian commodities, Baweja said.
"China wants to reduce the volatility in its access to primary goods," he said. "They want to reduce their dependence on the dollar in trade transactions."
HSBC Bank (China) Co. and Bank of Communications Co. completed the first yuan-ringgit transactions, according to the Foreign Exchange Trading Center, which is affiliated with the central bank. The central bank was investigating the possibility of offering new currency pairs on the interbank market, including ruble, won, and ringgit, an unnamed official at the center said in April.
"Gradually the dollar is being eliminated from the foreign-trade settlement flows," said Dariusz Kowalczyk, a Hong-Kong based senior economist at Credit Agricole CIB. "People are beginning to trade Asian currencies without intermediation via the dollar."
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Sona Resources Expects Positive Cash Flow from Blackdome,
Plans Aggressive Exploration of Elizabeth Gold Property
On May 18, 2010, Sona Resources Corp. (TSXV: SYS, Frankfurt: QS7) announced the release of a preliminary economic assessment for gold production at its flagship Blackdome and Elizabeth properties in British Columbia.
Sona Executive Chairman Nick Ferris says: "We view this as a baseline scenario for gold production. The project is highly sensitive to the price of gold. A conservative valuation of gold at $1,093 per ounce would result in a pre-tax cash flow of $54 million. The assessment indicates that underground mining at the two sites would recover 183,600 ounces of gold and 62,500 ounces of silver. Permitting and infrastructure are already in place for processing ore at the Blackdome mill, with a 200-tonne per day throughput over an eight-year mine life. Our near-term goal is to continue aggressive exploration at Elizabeth and develop a million-plus-ounce gold resource, commencing production in 2013."
For complete information on Sona Resources Corp. please visit: www.SonaResources.com
