More threats to dollar supremacy

Only one fellow in ten thousand understands the currency question, and we meet him every day.
 -Kin Hubbard

Came across this quip on currency markets which seems to still apply in the current foreign exchange markets. The currency question is still front and center with a number of countries trying to reduce the supremacy of the dollar and use currencies as means to enhance trade. 

Last week saw a story on the CEO of Airbus asking for the ECB to do something about the crazy values of the euro, which means that it is too high. Clearly exporters want a lower euro. They want the ECB to push the currency depreciation button and fast.

We have the French upset with the fine on BNP for close to $9 billion dollars. BNP does not have the moral high ground, but the US jurisdiction is based on the fact that the money flows with sanctioned countries was in dollars. The US has used the dollar payment systems for political means for one of the first times in decades against one of our major allies. The French are again voicing their concern over dollar hegemony. They will not let go of this issues especially when their economy is in the tank. They want to see the further ascent of the euro as a major reserve currency. Of course, this is at odds with what Airbus wants. No matter, these are the currency markets where anything goes in terms of opinions.

The BRICS countries will launch a development bank which may be hosted in Shanghai which will try and take more power away from a dollar centric world. This will be announced at the BRICS summit in Brazil later this month. It will compete against the World Bank and the Asian development bank. Here is the emerging market form of currency wars. They want their trade to no longer be denominated in dollars and be at the mercy of the Fed.

China wants to further speed up the liberalization of its currency and to use the RMB as a means of payment for its trade flows. Russia is in talks to make trade payments with China in renminbi. Some say that over 15% of China trade flows are being done in RMB.

The world is slowing trying to get out of the dollar money habit. The cost to the US will be significant but not noticed until it may be too late. There is not  tipping point today, but it is coming.