Asian De-Dollarization Explodes: South Korean Renminbi Deposits Surge 55-Fold In A Year

Tyler Durden's picture

Submitted by Simon Black via Sovereign Man blog,

The Bank of Korea — South Korea’s central bank — released data that says South Korean domestic deposits have reached 16.19 billion Chinese renminbi in July this year, which is a 55-fold increase from the same period last year when renminbi deposits accounted for only 290 million.

According to data from South Korean banks, the proportion of foreign currency deposits held in renminbi was 0.4% at the end of 2012. That number reached 13.7% at the end of last year, while at the end of July this year the renminbi accounted for 25.9% of all foreign currency deposits in South Korea.

That’s an incredible, exponential increase.

Since Korean interest rates continue to be low and follow closely those of most Western countries, Koreans realize that if they continue to hold their money in bank accounts denominated in won, their savings are steadily and surreptitiously being diminished by inflation that’s higher then their paltry returns.

With a lack of good investment opportunities in a zero-interest rate environment and with frothy equity markets, Koreans are at least diversifying their currency exposure, with domestic capital rapidly flowing into renminbi deposits that yield much higher at around 3.25% per year.

Coupled with the continued strength of the renminbi, the attractiveness of diversifying their capital in foreign currencies, and the renminbi in particular, is clearly a firm trend among Koreans.

This is a well known scenario. Just as Europeans from countries with weaker currencies and economic prospects used to safeguard their savings by holding them in Deutschmarks and Swiss franks, we see the same trend happening today.

Individuals, companies and even governments are diversifying their currency exposure — mostly on the account of the US dollar. Renminbi denominated bonds are now being issued by businesses all over the world– heck, even McDonald’s issued a renminbi bond.

And now the UK will become the first country in the world other than China to issue renminbi denominated government debt. In fact, just this morning the UK Treasury announced that it hired Bank of China, HSBC and Standard Chartered to arrange the sale, with the bond issuance likely happening next Monday.

This follows last week’s announcement from the People’s Bank of China that renminbi and euro are now directly tradable, without the need to use the US dollar as a conduit.

The signs are clearly all there. Everyone realizes that the present system is on its way out and are taking appropriate measures. The Germans, the French, the Brits, the Canadians, the Koreans…

Don’t you think it’s time to step up and do something about it too?

The situation today looks a lot like one big game of musical chairs. Investors and “hot money” desperately looking for yield in a zero interest rate environment are pushing prices of practically all assets sky high and diversifying into markets and currencies with brighter prospects.

Make sure that you’re not the one left stranded when the music stops.

*  *  *

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knukles's picture

Did Obie make a speech that I missed today?

stinkhammer's picture

paging edward quince to the white courtesy phone please

espirit's picture

OK, I'll bite...

 

but when?

zaphod's picture

"Everyone realizes that the present system is on its way out and are taking appropriate measures. The Germans, the French, the Brits, the Canadians, the Koreans…"

You can add American's who have been paying attention and stacking to that list....

NoDecaf's picture

Hey what's going on? I just tuned in...did I miss something?

 

#dancingwith_The_stars

medium giraffe's picture

Some bullshit about banks, or chinese food or something.  Hey, did you know that Kim Kardashian got her ass insured for like a million bucks?!

Hannibal Barca's picture

Only a million? I would bang it for that much!

ClowardPiven2016's picture

Edward Quince, WTF....didn't he know Carlos Danger was still available?

SAT 800's picture

Hey, knukles, they have a free 17 page report; you're not going to miss out, are you ?

gwar5's picture

Seems everybody knows the USD system joke is dying except Americans. The complicit MSM adn polys will be shocked, shocked when it 'unexpectedly' crashes.

 

peter4805's picture

Back when the Andrews Sisters were "Working for the Yankee Dollar" people flocked to the safety and security of the almighty greenback.

Now they're running from it in droves.

https://www.youtube.com/watch?v=DeY2ORU5uU4

 

The Duke of New York A No.1's picture

Don't worry Ben .... when QE fails we all know it was all Ebola's fault!.

Bernoulli's picture

Or super mario's. because he DIDN'T use it properly!

hairball48's picture

It'll be interesting to see who/what sops up all the dollars that will be sold

Oxbo Rene's picture

Belgium will save us ! ! !

SAT 800's picture

Maybe you can't eat gold; but you can definitely eat waffles ! (sorry, t he devil made me do it).

SAT 800's picture

Ha-Ha. that one got me in the funny bone. The answer when the time comes is "no bid". Nobody is the who  who is going to buy them.  However, that time is not now.

Bernoulli's picture

But... but...

....what about "king dollar"??

 

SAT 800's picture

What about King George III; what about the Zero Hedge motto ?

Squid Viscous's picture

Can't Icahn create his own CB? just to backstop the "real" one, I heard he's worth trillions now...?

reader2010's picture

When the wheels start to fall off suddenly,  the sheeple are distracted to things,  such as Ebola. Go figure. 

Unknown Poster's picture

"renminbi deposits that yield much higher at around 3.25% per year", and they are safer too. Well, OK then.

SAT 800's picture

Ha-Ha. I just love things that have higher coupons and are "safer too". Ha-Ha.

Kirk2NCC1701's picture

Lemme see if I got my Prepper radar in tune...

1. Keep on hand:  Mix of Cash (USD, CNY, EUR), some PM Bullion (Ag, Au, Pt), Prepper's "Stuff of Life" (Food, H2O, First Aid & Meds, Toiletries), Fuel, Tools, G+A.

2. Also maintain and invest in an active Network of "Kindred Spirits" (people of similar mind or same background, culture or tribe), i.e. "Birds of a Feather..."

You know... that kinda sounds like many "normal people" of many decades ago, before Big Bro came along and we ALL became "Folks".  Now, rather than being self-reliant, responsible and prudent (to be admired and aspire to), we are branded as "Preppers", i.e. people who are to be held suspect or avoided and maybe even feared.  What crazy/interesting times we live in.

Boomberg's picture

My grandparents lived off the land on a small farm, raised most of the food they needed and only needed small amounts of money for odds and ends they couldn't make or grow, like salt. They were not oddballs; that was normal in their times in the rural South. The Great Depression hit and they never knew it and could care less. Today, they would be considered either preppers or hippies depending on your viewpoint, and probably on a terrorist watch list. 

ClowardPiven2016's picture

and sadly they would probably struggle to survive trying to pay the exhorbitant taxes.

But it would be only fair because after all....."They didn't build farm that"

KnuckleDragger-X's picture

I never thought about it because I was raised to do it automatically. Survivalists came along then preppers but it's same as it always was to me. They can point and laugh now but they'll demand their grasshoppers share when the wheels come off and they can have their share, 165 grains at a time.

Silver Bullet's picture

Sleep tight switching your reserves to a country that is a Tahrir Square away from politcal upheaval. Enjoy.

Frankly Speaking's picture

You forgot to mention Occupy Wall Street in your drivel.

Silver Bullet's picture

Yes because the threat of an occupy Wall Street like event is even 1-100 as dangerous to the United States as a Tahrir Square in Beijing.
Hey, by all means, convert all your cash to Yuan. Go ahead.

hero HNL's picture

Scums of Asia investing in each other.

 

Koreans are too stupid to realized that it's on its way to become a vassal state of china like Tibet or Inner Mongolia. It will be bankrupt a 3rd time with major company earnings plummetting so hard.

The_Prisoner's picture

As in opposite to being a vassal state of the US like it has been for the last 50 years, together with Japan?

How's the weather in Tokyo today? I heard it was cloudy with a chance of Cesium 137.

kchrisc's picture

If one listens closely, they can hear the beautiful song of the petro-dollar fat lady singing.

An American, not US subject.

eddiebe's picture

Until a currency links to PM's they are all TP.

Karaio's picture

US Dollar: 

 

1 is high, is worth more than the Dollar, the Dollar, Yen, any other fiat currency. 

2 Physical gold is down, gold paper too. 

3 Commodities such as oil, iron, copper are at record low. 

 

This high - bogus - Dollarization is artificial. 

Our clients are buying these assets and inflating assets such as factories, mines, farms, houses worth half if they were built with marble from Carrara - preferably bought from idiots who is reliable US Dollar currency. 

I know some farmers who had many dollars in bank accounts, are buying machines, bovine semen, investing in limestone and other products, are getting rid of their dollars, buying some gold bars and stocking, construction of silos and warehouses. 

The US Dollar is higher than other currencies in this period, for the reasons above. 

When this party's over, who holds the production will be on the edge of the stratosphere. 

Those who remained with the paper will not yield. 

The music stops playing. 

Anyone with half a brain knows that the buyback is what any company does before closing their capital again. 

The logic is simple. 

I open my capital, increase the company gain a barbarity, recompro my actions and stop paying dividends to those imbeciles. 

Fuck them with paper money that I'm returning. 

What matters is the production, sale, my sweat and toil, no more leeches. 

hehe.

user2011's picture

This is interesting.. Chinese corrupted officials and businessmen are taking their money and run to other countries and buying up other hard assets.. Meanwhile, people outside China are buying up yuan or yuan related investments.

I guess it is really need to buy physicals now..

falconflight's picture

IMO this is one of the most important stories on ZH today.  It's more important than the Eboli stories of the day.

falconflight's picture

When will Saudi Arabia accept the Yaun for oil settlements?  

starman's picture

you know they have a even more sinister back up plan if everything fails! Could it be Belgium?

q99x2's picture

Bitcoin Last Price $369 the goose drank wine.

Fuku Ben's picture

“If you only knew the magnificence of the 3, 6 and 9, then you'd have the key to the universe" -Nikola Tesla

SAT 800's picture

Sometimes I wonder who could be crazier than people who think Bitcoin is a store of value; but then I remember Roman Catholics.

e_goldstein's picture

And now the UK will become the first country in the world other than China to issue renminbi denominated government debt. In fact, just this morning the UK Treasury announced that it hired Bank of China, HSBC and Standard Chartered to arrange the sale, with the bond issuance likely happening next Monday.

WTF? The Chinese hate the British.

SAT 800's picture

Personally, I regard the government of record of  the UK as mentally incompetant. However, during t he USA great inflation from 1976-81 when the value of the dollar was cut in half; we issued bonds denominated in Swiss Francs. Basically, it's considered a sign of desperation in a country with a failing currency. T he Pound is very over priced; t he UK doesn't actually have an economy.

Chuck Knoblauch's picture

China doesn't have a nation full of pensioners.

London doesn't have a future anymore.

They are just trying to save the past.