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> If they’re settling in rubles or yuan, for most definitions of “easily,” yes. Completely agree with your comment, just wanted to add that the vast majority o

> If they’re settling in rubles or yuan, for most definitions of “easily,” yes. Completely agree with your comment, just wanted to add that the vast majority of international companies will require a settlement in DM currencies (mainly dollar). This ensures that the relative size of the deal stays stable, as these currencies are highly stable and not subject to domestic manipulation. For a deal to be settled in, say, yuan, you would have to be pretty darn sure that your exposure to yuan is highly predominant: your in/outflows will be yuan-relative.

fuoqi 5y ago
>these currencies are highly stable Can you truly call them stable with 7+% official inflation, negative real interest rates, and China owning 3+ trillion USD-nominated assets, which it probably will start to gradually sell in the wake of sanctions against the Central Bank of Russia?
- JumpCrisscross 5y ago
  None of these factors, other than inflation, point to instability. With respect to inflation, that’s being directly addressed. Compared to every other currency, historical and extant, the major trading currencies of the day are highly stable across multiples of even the longest transaction time frames. They aren’t good long-term stores of value because that’s not what they’re built for.
  - lowkey 5y ago
    > With respect to inflation, that’s being directly addressed. Please explain. I don’t understand how that’s true. In last night’s SOTU President Biden said inflation was mostly due to car prices or something equally silly. I don’t see any nation seriously addressing inflation which is officially 7.5% but I believe to be much higher for most.
    - anonymoushn 5y ago
      I think there are multiple interest rate hikes planned for this year and the fed will cease marginal asset purchases (but not sell assets).
      - lowkey 5y ago
        What if I told you that multiple 0.25% interest rate hikes are unlikely to meaningfully counter 7.5% inflation? The last time the US had inflation this high Volcker had to raise rates to double-digits in order to break the back of inflation. Also, don't forget that 20% of all USD ever printed were printed in the past year and the Fed has made no claims that they plan to taper the money printer anytime soon.
    - WoahNoun 5y ago
      The 7% inflation number is measured as an increase in prices in consumer goods. Used car prices are up >30% and are a significant piece of consumer spending.
      - rswail 5y ago
        Perhaps because the demand for vehicles post COVID is exceeding supply. However, is it just drawing forward future demand, which would mean the inflation is temporary? I mean after a 2 year recession caused by the pandemic, in terms of large consumer items, like vehicles, you'd expect that. People want/need to start travelling again.
- imtringued 5y ago
  There is truly nothing worse than China giving money to Russia so they can pay off their dollar denominated debts...
Aperocky 5y ago
yuan is highly stable over the past 2 decades, in fact it gained about 20% on the dollar over that time frame. The problem with Yuan are more with its low convertibility (read: usage rate outside China), but that may change eventually. Using currency sanctions to achieve political goals are simultaneously expending trust in those currencies.
- vineyardmike 5y ago
  > highly stable over the past 2 decades, in fact it gained about 20% Stable or gaining 20%? Also its not stable, nor trustworthy. You can't trust china to not manipulate it.
  - CyanBird 5y ago
    > You can't trust china to not manipulate it. Rather you 'can* trust China to manipulate it when needed, they need the currency to serve specific macroeconomic policy decisions and they will use the levers on their power to achieve it, the fact that western speculators might get burned for it is not a core government interest at this time, maybe in the future
  - Aperocky 5y ago
    > Also its not stable, nor trustworthy. The Euro had much larger fluctuation in the same time frame. Lecture me, are your definition of stable tied to data, or is it tied specifically to your own opinion? How long would it be until you admit it was actually stable? 10 more years? 100? A millennia?
  - thematrixturtle 5y ago
    Not to put too fine a point on it, but the reason the US Federal Reserve exists is to "manipulate" the dollar. Personally, I've always liked Singapore's approach of anchoring the Singapore dollar to a basket of major currencies. However, they also give themselves leeway by not publishing the basket's constituents or weightings, meaning they can still make the dollar dance by tweaking those.
    - 5y ago

fuoqi 5y ago

>these currencies are highly stable Can you truly call them stable with 7+% official inflation, negative real interest rates, and China owning 3+ trillion USD-nominated assets, which it probably will start to gradually sell in the wake of sanctions against the Central Bank of Russia?

JumpCrisscross 5y ago
None of these factors, other than inflation, point to instability. With respect to inflation, that’s being directly addressed. Compared to every other currency, historical and extant, the major trading currencies of the day are highly stable across multiples of even the longest transaction time frames. They aren’t good long-term stores of value because that’s not what they’re built for.
- lowkey 5y ago
  > With respect to inflation, that’s being directly addressed. Please explain. I don’t understand how that’s true. In last night’s SOTU President Biden said inflation was mostly due to car prices or something equally silly. I don’t see any nation seriously addressing inflation which is officially 7.5% but I believe to be much higher for most.
  - anonymoushn 5y ago
    I think there are multiple interest rate hikes planned for this year and the fed will cease marginal asset purchases (but not sell assets).
    - lowkey 5y ago
      What if I told you that multiple 0.25% interest rate hikes are unlikely to meaningfully counter 7.5% inflation? The last time the US had inflation this high Volcker had to raise rates to double-digits in order to break the back of inflation. Also, don't forget that 20% of all USD ever printed were printed in the past year and the Fed has made no claims that they plan to taper the money printer anytime soon.
  - WoahNoun 5y ago
    The 7% inflation number is measured as an increase in prices in consumer goods. Used car prices are up >30% and are a significant piece of consumer spending.
    - rswail 5y ago
      Perhaps because the demand for vehicles post COVID is exceeding supply. However, is it just drawing forward future demand, which would mean the inflation is temporary? I mean after a 2 year recession caused by the pandemic, in terms of large consumer items, like vehicles, you'd expect that. People want/need to start travelling again.
imtringued 5y ago
There is truly nothing worse than China giving money to Russia so they can pay off their dollar denominated debts...

Aperocky 5y ago

yuan is highly stable over the past 2 decades, in fact it gained about 20% on the dollar over that time frame. The problem with Yuan are more with its low convertibility (read: usage rate outside China), but that may change eventually. Using currency sanctions to achieve political goals are simultaneously expending trust in those currencies.

vineyardmike 5y ago
> highly stable over the past 2 decades, in fact it gained about 20% Stable or gaining 20%? Also its not stable, nor trustworthy. You can't trust china to not manipulate it.
- CyanBird 5y ago
  > You can't trust china to not manipulate it. Rather you 'can* trust China to manipulate it when needed, they need the currency to serve specific macroeconomic policy decisions and they will use the levers on their power to achieve it, the fact that western speculators might get burned for it is not a core government interest at this time, maybe in the future
- Aperocky 5y ago
  > Also its not stable, nor trustworthy. The Euro had much larger fluctuation in the same time frame. Lecture me, are your definition of stable tied to data, or is it tied specifically to your own opinion? How long would it be until you admit it was actually stable? 10 more years? 100? A millennia?
- thematrixturtle 5y ago
  Not to put too fine a point on it, but the reason the US Federal Reserve exists is to "manipulate" the dollar. Personally, I've always liked Singapore's approach of anchoring the Singapore dollar to a basket of major currencies. However, they also give themselves leeway by not publishing the basket's constituents or weightings, meaning they can still make the dollar dance by tweaking those.
  - 5y ago