Currency Exchange

03/31/23.  Buying Brazilian stuff with yuan and Chinese stuff with reais is a win/win in the short run -- everybody gets to conserve their dollar reserves -- but Brazil's chronic trade deficit with China will eventually leave a lot of reais in Chinese hands, and the exchange rate will be whatever the Chinese say it is.

The first thing that came to my mind was pressuring Brazil into selling agricultural land.  Brazil has pretty strict laws on that, but China has been buying up a lot of land in Africa.  The threat of currency manipulation could put them over a barrel, if the club is big enough.  Historically,  Brazil is highly resistant to that kind of pressure.  It will be very interesting to reassess this arrangement about five years out.

You can't trade yuans outside China.  Their Currency is worthless. 

Same for Russian Rubles. 

If only the Treasury Department stopped pushing US issued debt to get currency, this would never have happened.  And also increasing the circulation of dollars. 

Chinese Ports are standing idle.  This means, we are going to get their manufactured goods dumped , at expense of our manufacturing base. 

Unless, of course they manage to pair their exports with value added manufacturing in Brazil. Auto assembly would be a case in point.  They open up their plants here, allow us to make a percentage of components in Brazil, while exporting part of the components.

This also would be a back door so they can import semiconductors they are forbidden to acquire.

Brazil Real has risen above 0.20 today against the US dollar for the first time since June, 2022.

One reason, sugar spot price spiked to 24 cents/pound.  Brazil has been the largest sugar exporter for a hundred years although for the past two years India has been successfully challenging them.

Another reason, Dilma Rousseff has been apointed head of an international bank including China, India, Russia and Saudi Arabia looking for  (and finding) alternatives to using SWIFT and US dollars for trade.

Another reason, oil seems to have broken out of its channel, to the upside,  WTI rising to $82/barrel.

Warren Buffett said,the de-dollarization rumor,will not take place,China though,not to be underestimated.

I feel the Chinese are desperate for US Dollars, more than they admit to be. 

Otherwise they would not be beating the crap of kids on Hong Kong two years ago...  it had nothing to do with breaking in the two systems one China.  it had to do with huge Capital Flight.  That place used to bring in the Dollars, now it is the other way around.

Look what is going on around Monterrey.  The Nuevo Leon's State Government is putting up incentives for Chinese Manufacturers to move in. They broke ground for a Chinese dedicated industrial parking, and leases are being snapped up by Chinese industrialists, sight unseen. 

As for hedging on the Yuan, I am no Forex trader, but I am not willing to rush into buying their currency either.  Fools rush in. 

And Lula is a swell guy, ........on domestic policy. Regarding his  Foreign Policies, it's a compound of missteps. He's got the wrong advisors.  He and his cronies are pandering to the usual suspect stiffs, Russia and China.

Meanwhile, the US, Australia, New Zealand, and the UK are siding with the US.  And for any suspicion this is "an Anglo thing"  , Japan is rushing in towards the US at their beck in call, unconditionally. 

You want to see how disfunctionall are Lula's Foreign Policies?  Go back when he rush to break up big pharma patents.  The Americans turned to India and China for their expired patent, assay, and active ingredient manufacturing, even at the expense of their glaring violations ( Go have fun with the FDA logs, you will get a choc-full of violations sanctioned against Indian and Chinese drug makers , lack of adherence to SOPs, shody documentation, you name it ).   

What did Brazil got out of it for their Drug Companies????   Diddle squat. 

The joke is on us.

Warren Buffett said,the de-dollarization rumor,will not take place,China though,not to be underestimated.
-@Boombop44

I would not take Warren's Buffet nuggets of wisdom the bank.  He has been taken to the cleaners lately. Those three partners of 3G Capital, the Brazilian ones who bought Heinz, Anheuser Busch, Burger King and Popeye swindled him of billions. 

And they are private equity's types. The same types Mr Buffet described as unsavory characters. 

The Oracle of Omaha geezer is loosing his mojo. And he says what's convenient to him.  And the average willy nilly American retail investor thinks he is some demigod.  He ain't.

Matter of fact, I would not pay much heed  to a single Expert or Luminary of any kind. They are all selling something at the end of the day.  Trust your own sources, double check on them, and trust your instincts, if you are old enough.

There is a reason why Bloomberg made a fortune selling overpriced subscriptions to proprietary terminals used by financial firms.  Getting hard  data and  facts to cross, and being a study of history, trumps all of what these "prophets" have to say.