Petrodollar Panic? China Signs Currency Swap Deal With Qatar & Canada

Tyler Durden's picture




 

The march of global de-dollarization continues. In the last few days, China has signed direct currency agreements with Canada becoming North America's first offshore RMB hub, which CBC reports analysts suggest "could double maybe even triple the level of Canadian trade between Canada and China," impacting the need for Dollars.But that is not the week's biggest Petrodollar precariousness news, as The Examiner reports, a new chink in the petrodollar system was forged as China signed an agreement with Qatar to begin direct currency swaps between the two nations using the Yuan, and establishing the foundation for new direct trade with the OPEC nation in the very heart of the petrodollar system. As Simon Black warns, "It’s happening... with increasing speed and frequency."

As CBC reports,

Authorized by China's central bank, the deal will allow direct business between the Canadian dollar and the Chinese yuan, cutting out the middle man — in most cases, the U.S. dollar.

 

Canadian exporters forced to use the American currency to do business in China are faced with higher currency exchange costs and longer waits to close deals.

 

"It's something the prime minister has been talking about. He wants Canadian companies, particularly small- and medium-sized businesses, doing more and more work in China, selling goods and services there," said CBC's Catherine Cullen, reporting from Beijing.

Sovereign Man's Simon Black has some ominous thoughts on Canada's move...

It’s happening. With increasing speed and frequency.

 

The People’s Bank of China and the Canadian Prime Minister’s office issued a statement on Saturday stating that Canada will establish North America’s first offshore renminbi trading center in Toronto.

 

China and Canada agreed on a number of measures to increase the use of renminbi in trade, business, and investment. And they further signed a 200-billion renminbi bilateral currency swap agreement.

 

Moreover, just today, hot off the presses, the central banks of China and Malaysia announced the establishment of renminbi clearing arrangements in Kuala Lumpur, which will further increase the use of renminbi in South-East Asia.

 

This comes just two weeks after Asia’s leading financial center, Singapore, became a major renminbi hub, with direct convertibility established between the Singapore dollar and the renminbi.

And as Black notes, everyone is in on the trend. All across the world, the renminbi is quickly becoming THE currency for trade, investment, and even savings.

Renminbi deposits in South Korea, for example, surged 55-times in one single year. It’s stunning.

 

The government of UK just issued a renminbi bond, becoming the first foreign government to issue debt in renminbi.

 

Even the European Central bank is debating to include renminbi in its official reserves, while politicians the world over are sounding not-so-subtle warnings that a new non-dollar monetary system is needed.

 

Nothing goes up or down in a straight line. And given how volatile Europe and the global economy continue to be, the dollar may certainly be in for its surges and bumps in the coming months.

 

But over the long-term it’s glaringly obvious where this trend is going: the rest of the world no longer wants to rely on the US dollar, and they’re making it a reality whether the US likes it or not.

*  *  *

And now, no lesser oil-producing state than controversial Qatar has signed an agreement too.. seemingly opening up the door to Petrodollar panic... (as The Examiner reports)

The petro-dollar system is the heart and soul of America's domination over the global reserve currency, and their right to make all nations have to purchase U.S. dollars to be able to buy oil in the open market. Bound through an agreement with Saudi Arabia and OPEC in 1973, this de facto standard has lasted for over 41 years and has been the driving force behind America's economic, political, and military power.

 

But on Nov. 3 a new chink in the petro-dollar system was forged as China signed an agreement with Qatar to begin direct currency swaps between the two nations using the Yuan, and establishing the foundation for new direct trade with the OPEC nation in the very heart of the petro-dollar system.

 

While this new agreement between China and Qatar is only for the equivalent of $5.7 billion over the next three years, Qatar becomes the 24th nation to open its Forex market to the Chinese currency, and solidifies acceptance of the Yuan as a viable option for the future in the Middle East.

 

China's central bank announced Monday that it has signed a currency swap deal worth 35 billion yuan (about 5.7 billion US dollars) with the central bank of Qatar.

 

The three-year deal could be extended upon agreement by the two sides,said a statement on the website of the People's Bank of China (PBOC).

 

Also on Monday, the two sides signed a memorandum of understanding on Renminbi clearing settlement in Doha. China agreed to extend the RMB Qualified Foreign Institutional Investor scheme to Qatar, with an initial quota of 30 billion yuan.

 

The deal marked a new step forward in financial cooperation between the two countries, and will facilitate bilateral trade and investment to help maintain regional financial stability, the statement said. - China Daily

 

It is perhaps no coincidence that the term for the new agreement is set for three years, and is within the exact time frame being predicted by the director of the Finance Institute under the Development Research Center of the State Council, Zhang Chenghui for the Renminbi to become fully convertible in the global financial system.

 

The need for new markets and a more stable trade currency in Qatar could be tied to a new report issued last week by French bank BNP Paribas which showed that petro-dollar recycling has fallen to its lowest levels in 18 years, signifying that even oil producing nations in the Middle East are finding it difficult to trust the U.S. dollar, and facilitate its use in trade due to its depreciation since the advent of the Federal Reserve's massive QE programs.

 

Nearly every week now, China, Russia, or one of the BRICS nations are finalizing agreements that supersede the old system of dollar trade and reliance on the petro-dollar system. And as many countries begin to reject the dollar due to the exported inflation that is growing in nations that are relegated to having to hold them for global oil purchases, alternatives such as the Chinese Yuan will become a more viable option, especially now that the Asian power has taken over the top spot as the world's biggest economy.

*  *  *

The demise of Petrdollar flows...

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Mon, 11/10/2014 - 22:44 | 5435088 logicalman
logicalman's picture

I think the camel's back is really aching.

Mon, 11/10/2014 - 22:49 | 5435111 Supernova Born
Supernova Born's picture

They found a few surviving members of the middle class in a hidden valley in Canada.

Banksters gonna rape them.

Mon, 11/10/2014 - 22:54 | 5435121 El Oregonian
El Oregonian's picture

They better be holden golden outside ze borders...

Orrrr... Be going for a boat ride...

Mon, 11/10/2014 - 22:55 | 5435145 kliguy38
kliguy38's picture

They're sick of it all............time to pull the chord

Tue, 11/11/2014 - 02:41 | 5435662 strannick
strannick's picture

Meet the new chink (in the Petrodollar system), same as the old chink.

Fool me once, shame on me, fool me twice...?..., wont get fooled agin.

Tue, 11/11/2014 - 08:44 | 5435948 Raging Debate
Raging Debate's picture

Strannick - You got it correct. As stated here for years, the Yuan becoming the reserve currency was a feature not a bug. There is no real friction between China and America. It is media hype. As the final reset happens in America, the volatility will be blamed on China. As America is becoming increasingly energy independent and is a massive food producer and has lots of infrastructure and tech, I do not expect $10 gas or shortages for long, the real problem is unfunded liabilities.

I think we'll see some form of false flag that "collapses" the US govenment and America 2.0 will offer anywhere from .40-.60 cents on the dollar to government beneficiaries. I am certain this will happen before 2020. I think the hedges people describe are useful for that event. I like tradeable luxuries too, booze, cigs, etc.

Just another reserve currency host, part of the central bank model which lasts for 80 years. It is a blessing and then a curse. Get ready for ths gold standard again but the price fixing will remain, it will just happen there instead of here. This is why Greenspan is out publically discussing it. Gold will be less volatile than currencies as this rapid transition to the Yuan continues.

Mon, 11/10/2014 - 22:59 | 5435158 TruthInSunshine
TruthInSunshine's picture

ZH is 180 degrees, diametrically wrong on this.

China is actually up shit's creek here as Japan and now South Korea race to debase, and since China's GDP is more export dependent than either as a % of GDP, it's got a major fucking problem on its hand if it does not ultimately months debasement race.

Never let emotion cloud factual analysis.

Mon, 11/10/2014 - 23:06 | 5435175 konputa
konputa's picture

Right on Truth. I was just talking about this yesterday when CNY fell 100 pips on open.  China is feeling the pain from the US dollar strength.  Float needs to happen soon or shit's going to get bloody.

Mon, 11/10/2014 - 23:21 | 5435223 COSMOS
COSMOS's picture

Those fu**ing little backstabbing Canadians.  They better be careful or we just might see a color revolution in British Columbia.  I always wanted a land corridor to Alaska that included the Canadian Rockies.  This shit is right in our own backyard, kind of like putting nuclear missiles in Cuba is what this exchange center is in Toronto.

Mon, 11/10/2014 - 23:23 | 5435244 cherry picker
cherry picker's picture

I hate to disappoint you, but Canada is not back stabbing.  Ever since George W alienated us for not follwing his illegal invasion of Iraq, we were treated like second class citizens by DC.

Go ahead, try taking BC.  You won't be the first to find out when Canadians get angry they are more than capable of looking after themselves.

Mon, 11/10/2014 - 23:29 | 5435259 COSMOS
COSMOS's picture

Ayyyyyy, 10 of you male Canuks arent worth one US female Marine, you little girl.  All your weapons are USA made and for the high tech planes and missiles etc, we do have backdoors in the software.  Lets just say you'd be bombing your own bases.  If we want BC we will take BC and there is nothing you little stone age club/hockey stick neanderthals can do about it.

Mon, 11/10/2014 - 23:33 | 5435281 cherry picker
cherry picker's picture

And that is the typical ignorant ugly American that the world is tired of.

Good riddance, fortunately the whole country isn't made up of the likes of you.

Mon, 11/10/2014 - 23:44 | 5435301 COSMOS
COSMOS's picture

Ugly American lol, you pasty ass white Canuks are about the ugliest sun deprived albinos I have ever seen.  Listen you all have a freaking speech impediment and are so insecure that you need to end every freaking sentence with a Ayyyy, basically an insecure question mark cause you shits dont know what you are talking about anytime you say anything and are asking for an affirmation from the listener

Not only that but I am sick and tired of hearing about your Avro Arrow bullshit jet plane from the 50s and you yapping about what a phenomenal piece of shit it was and could of still been.

http://en.wikipedia.org/wiki/Avro_Canada_CF-105_Arrow

Get fucking over it already

Besides British Columbia would make a nice new State in the USA we shall call it The State of COLUMBIA

Mon, 11/10/2014 - 23:54 | 5435368 cherry picker
cherry picker's picture

Thanks for assuming I am Caucasian.  :)

I really don't care about airplanes. Guns don't kill people, people kill people.   I need a really good reason to pull a trigger, self defense being one of them.  I wouldn't pull a trigger because some politician buffaloed me into thinking it was OK.

You would think some of you would learn from your boots on the ground vets who experienced combat and don't want anything to do with it.

No one in their right mind talks about invading a neighbor to open a corridor.  Thats the stuff Adolf did.  He didn't last all that long.

Tue, 11/11/2014 - 00:01 | 5435393 TruthInSunshine
TruthInSunshine's picture

I really like Canada and Canadians are extremely nice people, by and by.

But their gov't structure is completely fucked, in the same way Australia's is, and in fact, the two resemble each other in many ways (resource dependent, huge surplus with one trading partner - Canada's is U.S., Australia's is China; real estate bubbles of MASSIVE proportions).

It's not personal.

Tue, 11/11/2014 - 00:20 | 5435444 Rock On Roger
Rock On Roger's picture

Mmm...

Moar sunshine kool-aid.

Tue, 11/11/2014 - 00:20 | 5435446 cherry picker
cherry picker's picture

I like the United States and Americans too.  I don't take it personal.

A lot of what is going on today the average Joe has no control over, until enough get fed up that is.

I have no problem agreeing to disagree.

Tue, 11/11/2014 - 02:36 | 5435658 TruthInSunshine
TruthInSunshine's picture

1, I'm being slightly snarkastic, and 2) Both the U.S. & Canadian Citizenry are being eviscerated by the same class of globalists who have zero allegiance to any nation (even their birthplace).

p.s. - At least Canada doesn't stir up conflicts around the globe that wind up killing far more innocent civilians and causing massive human suffering than that which these "interventions" are designed/alleged (at the outset) to mitigate.

Tue, 11/11/2014 - 11:32 | 5436447 Defiated
Defiated's picture

its Remembrance Day today....please 'Remember' Heros do not drop bombs on people from 30,000 ft!

Tue, 11/11/2014 - 02:55 | 5435675 e_goldstein
e_goldstein's picture

Kicking out the royal governors would start to cure what ails your country.

Tue, 11/11/2014 - 00:37 | 5435488 TeethVillage88s
TeethVillage88s's picture

Any truth to the idea that Canadian Culture, Australian Culture, New Zealand Culture are so like British that the Queen's Monarchy is defacto Elite Government.

Just playing with this Idea that USA took over the British Empire and that we are in it with the English speaking Countries... which might answer to British Bankers/European Banker Cartel with German Science, Organization, Military Technology, and Spy stuff.

Well we are all related to the German Tribes... by Royalty.

British Raj was based on Trade, Imports, Taking Resources, coopting the local population for military & government functions.

Tue, 11/11/2014 - 04:04 | 5435718 shovel ready
shovel ready's picture

Australia is a constitutional monarchy. We are not a republic. The Queen is our head of state.

Tue, 11/11/2014 - 20:48 | 5438661 TeethVillage88s
TeethVillage88s's picture

So lets look:

- queen regnant of seven independent Commonwealth countries: the United Kingdom, Canada, Australia, New Zealand

- United Kingdom of Great Britain and Northern Ireland, Unitary parliamentary constitutional monarchy, its military expenditure ranks fifth or sixth in the world
- United States, Federal presidential constitutional republic
- Canada Federal parliamentary constitutional monarchy, with Queen Elizabeth II as its head of state
- New Zealand Unitary parliamentary constitutional monarchy, Queen Elizabeth II is the country's head of state
- Commonwealth of Australia Federal parliamentary constitutional monarchy

- The fourteen British Overseas Territories are: Anguilla; Bermuda; the British Antarctic Territory; the British Indian Ocean Territory; the British Virgin Islands; the Cayman Islands; the Falkland Islands; Gibraltar; Montserrat; Saint Helena, Ascension and Tristan da Cunha; the Turks and Caicos Islands; the Pitcairn Islands; South Georgia and the South Sandwich Islands; and Sovereign Base Areas on Cyprus

https://en.wikipedia.org/wiki/United_Kingdom#mediaviewer/File:The_Britis...

**So that USA Spends the Most on Military in the World very likely is a feature of the British Empire, and that we support large "Corporate Appendages" such as a industrial giants and big Defense Contractors (Zaibatsu)**While allowing limited growth of smaller business not deemed militarily important**And that Lower Wage Labor Force is important we Open Borders to Immigrants, Outsourcing, and Off Shore Production Just as the British Empire did**

Tue, 11/11/2014 - 07:46 | 5435884 doctor10
doctor10's picture

As f'd as thye may be, ya may want to look at positions 1, 12 and 27 below.

At least they are more careful about letting their citizens be asset-stripped than the monkeys that run the USA

http://www.middleclasspoliticaleconomist.com/2013/06/us-median-wealth-on...

Tue, 11/11/2014 - 00:05 | 5435395 COSMOS
COSMOS's picture

Listen Don Quixote you Canuks are not exactly Russia.  For one we are more than TEN times your population, unlike the Germans vs the Russians.  All you guys have is enough for one wave of attack and one royal canadian mounted police unit (i would never call that an army) and that is it, you are wiped out.  So dont go wishing for a Moscow or Stalingrad Winter miracle cause it wont happen.  All we have to do is walk in the winter when all the Canuks have left Canada for sunny weather in Mexico or the Caribbean.  It would be a CAKEWALK taking over.

Tue, 11/11/2014 - 00:08 | 5435413 cherry picker
cherry picker's picture

That's OK.  You guys ever tried somthing like that and our blood is spilled, Putin and China would probably come on over plus Mexico as once that shit starts, absolutely no one would trust you anymore.  Then we have a lot of Indians, Pakistanis and others living here too.  I don't think their relatives back home are going like getting messages their relatives were blown away by some tomahawk missle.

There is enough bad shit happening in this world as it is, you don't want to be poking a stick in a hornet's nest. 

Tue, 11/11/2014 - 00:14 | 5435417 COSMOS
COSMOS's picture

LOL by the way I am pulling your leg and just having some fun with you.  But serioulsy that exchange center is a MAJOR Backstab, not cool.  And I always wanted a land corridor to Alaska.  Hate having to go through a border crossing to drive to Alaska, nothing personal. But seriously mark my words,  you guys stray too far towards China and things will get unpleasant real fast.

Tue, 11/11/2014 - 00:17 | 5435439 cherry picker
cherry picker's picture

I kind of figured after the second response you were pulling my leg, thanks for admitting it.

I didn't know until today about the currency agreement.  There is a lot of stuff going behind the scenes you and I will never know about.  There may be reasons.  China owns a lot of BC, just like it has been buying in the USA.  That may have something to do with it.

Tue, 11/11/2014 - 00:46 | 5435443 COSMOS
COSMOS's picture

LOL you are very perceptive.  I thought you would of been tipped off by the Avro Arrow Rant... Too bad it never saw production, it was a nice homegrown design.  They say the Soviets were real interested in the plans and the engines.  I must confess I always wondered how the Canucks got such an advanced design and concept with engines flying considering they never really had the manufacturing and design experience of the USA during WW2??????????  Close to MACH 2.0 for a plane in the fifties is pretty badass and ahead of its time.

"Within two months of the project cancellation, all aircraft, engines, production tooling and technical data were ordered scrapped.[90] Officially, the reason given for the destruction order from Cabinet and the Chiefs of Staff was to destroy classified and "secret" materials used in the Arrow/Iroquois programs.[91] The action has been attributed to Royal Canadian Mounted Police fears that a Soviet "mole" had infiltrated Avro, later confirmed to some degree in the Mitrokhin archives

Following the cancellation of the Avro Arrow project, CF-105 Chief Aerodynamicist Jim Chamberlin led a team of 25 engineers to NASA's Space Task Group to become lead engineers, program managers, and heads of engineering in NASA's manned space programs—Projects Mercury, Gemini and Apollo.[95] The Space Task Group team eventually grew to 32 Avro engineers and technicians, and become emblematic of what many Canadians viewed as a "brain drain" to the United States.[95][N 11] Many other engineers, including Jim Floyd, found work abroad in either the UK or the United States. Work undertaken by both Avro Canada and Floyd benefited supersonic research at Hawker Siddeley, Avro Aircraft's UK parent, and contributed to programs such as the HSA.1000 supersonic transport design studies were ultimately influential in the design of the Concorde"

Tue, 11/11/2014 - 00:20 | 5435447 TruthInSunshine
TruthInSunshine's picture

Cosmos, I am not blowing smoke up Canadian assholes when I say that some of the biggest badasses I've ever encountered hailed from Canada. They have extremely competent survivalists, people who know how to live off the land in very harsh conditions, and in many ways, a lot of people in certain regions of Canada are much more robust than most Americans.

On the flip-side, they have been infected by mass media/infotainment/propaganda/Kardashian-mentality/huge government welfare statism, too, in some respects and regions more so than in the
U.S.

We're all in this brave new Fascist, Orwellian Nightmare world together, no matter what our nationality/country of origin.

Tue, 11/11/2014 - 00:58 | 5435518 Kirk2NCC1701
Kirk2NCC1701's picture

I frikkin KNEW you were yankin' his chain -- given your many posts.

I agree that Canada would be taken over in no time, but... you must admit that there is a difference between the initial conquest, and MAINTAINING said conquest.  The latter would kick Imperial ass 10x faster and worse than anything experienced in the ME.  Besides, in time at all the US soldiers would say "Fuck it!" and switch sides.  Shooting Canucks is like shooting Family.  NOT gonna happen.  GIs would sooner shoot O and the Bass-turds in DC.

p.s. I'd have to resurrect Scotty (from BC) and fire up those photon torpedos in support.  I'd get Lorne Green (Bonanza), Monty Hall (Let's Make A Deal), and Austin Powers as the Fifth Column.  Shania Twain would sing a song about it, and tell you that the Invasion "Don't Impress Me Much".  Celine Dion would have to boycott Vegas too.  Eh.  ;-)

- Kirk out.

Tue, 11/11/2014 - 08:26 | 5435926 shovelhead
shovelhead's picture

Remember this:

A hockey stick behind every maple tree.

Tue, 11/11/2014 - 11:32 | 5436451 Defiated
Defiated's picture

An up every 'merican arse'...

Tue, 11/11/2014 - 07:38 | 5435874 Divine
Divine's picture

Cosmos is a typical American douche...

Like it's your problem who Canada does business with?

You are the cancer that is killing the world. I think you should concentrate on your own issues.

 

Mon, 11/10/2014 - 23:28 | 5435261 TruthInSunshine
TruthInSunshine's picture

Canada is fucked, too. They run huge surpluses, especially based on natural resources.

We've already witnessed manufacturing flee from Canada to Mexico as global corporations rank Canada as one of, if not the most, expensive place to do business and to produce goods.

Tue, 11/11/2014 - 00:29 | 5435467 TeethVillage88s
TeethVillage88s's picture

wow, I'm surprised, but 20 years ago I didn't like prices in dinners and state run beer stores.

Mon, 11/10/2014 - 23:33 | 5435263 TruthInSunshine
TruthInSunshine's picture

Canada is about to take their Loonie out to the woodshed, too.

They already have to a degree, but not nearly enough.

Mon, 11/10/2014 - 23:32 | 5435278 Dragon HAwk
Dragon HAwk's picture

Canadians Used to Have Guns..  but i guess they could throw Empty Beer Bottles

Tue, 11/11/2014 - 00:32 | 5435350 COSMOS
COSMOS's picture

They will let the bears, badgers, and wolves do the fighting for them

Mon, 11/10/2014 - 23:30 | 5435270 Rock On Roger
Rock On Roger's picture

But it isn't your back yard, it is our yard.

 

If you don't want to build a pipeline so we can sell our oil,

then fuck you, we'll sell to China.

 

What fucking arrogant, ignorant bullies you americans are.

 

 

 

 

Tue, 11/11/2014 - 00:05 | 5435389 hobopants
hobopants's picture

Don't forget narcissistic and snide as in my case. Seriously though, don't let this kind of nationalistic crap get to you, or you play right into the hands of the elites.

They want to make it an American thing, or a Canadian thing, or a Russian thing. In truth it's a sociopathic, oligarch thing and that's where our anger should be focused.

So why don't we put the pom-poms down, stop playing team sports, and cut the head off of the snake instead? Way more productive.

Tue, 11/11/2014 - 00:26 | 5435460 tarabel
tarabel's picture

 

 

Actually, we're pretty tolerant of Canada and have not insisted on any formal declaration of Finlandization from you. It's inherent in the reality of the situation, however.

If we want something from you, apart from snivelling, what are you going to do about it?

But personally, if you want to swap your economic relationship with the United States straight up for one with China, you have my blessing. Once you see how "kind" the Chinese are to their foreign extraction colonies, you'll soon be singing a different tune and it starts with the words "Yankee Doodle".

Tue, 11/11/2014 - 00:44 | 5435503 GooseShtepping Moron
GooseShtepping Moron's picture

I'm an American, a Caucasian, and a Conservative, and I happen to think Canadians are pretty cool. They seem like honest, intelligent, hard-working people to me - the kind of people that Gordon Lightfoot and Stompin' Tom Conners sing about in their folk ballads. I like Canadians very much.

Tue, 11/11/2014 - 01:00 | 5435543 Kirk2NCC1701
Kirk2NCC1701's picture

I resent your comment.  Especially the part where you call yourself a "Moron". 

I know Morons.  And you're no Moron.  ;-)

Tue, 11/11/2014 - 01:11 | 5435556 Bananamerican
Bananamerican's picture

agree, but like Truth said, they also have a NASTY PC streak in 'em apparently...

Tue, 11/11/2014 - 02:08 | 5435639 TBT or not TBT
TBT or not TBT's picture

Their most excitable immigrants can't take a joke.    They'll saw your head off with a big knife.

Mon, 11/10/2014 - 23:59 | 5435385 oudinot
oudinot's picture

The oil is in Alberta, not British Columbia.

Tue, 11/11/2014 - 00:06 | 5435407 COSMOS
COSMOS's picture

We can take that also, and the Northern Territories, then we have a bigger stake in the Arctic Resources Play

Tue, 11/11/2014 - 01:05 | 5435546 Kirk2NCC1701
Kirk2NCC1701's picture

For starters, we need to take Canada's beer.  As much as they brew, lest it fall into the wrong (Chinese) hands.

p.s.

Q: What do Making love in a Canoe and American beer have in common?

A:  Both are fuckin' close to water.  ;-)

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