USD/CNY

Those who’re eagerly awaiting the end of the “dollar hegemony,” or the end of the dollar as the top global reserve currency, well, they’ll need some patience, because it’s happening at a glacial pace – according to the IMF’s just released data on the “Currency Composition of Official Foreign Exchange Reserves” (COFER) for the second quarter 2018.

What it confirms: Global central banks are ever so slowly losing their appetite for being over-exposed to US-dollar-denominated assets, though they’re not dumping them from their foreign exchange reserves; they’re just tweaking them....

Wolf Street
US Dollar Refuses to Die as Global Reserve Currency but Loses Ground

Wolf Richter

See also

The IMF released the Currency Composition of Official Foreign Exchange Reserves (COFER) data for Q2 2018 on Friday. The total of reserves that are broken down by currency went up by $123BN, and unallocated reserves fell by $243BN. The most notably observation in the COFER report is that reserve managers actively decreased their allocation to USD – more than offsetting the effect of dollar appreciation – while at the same time adding significantly to non-USD allocations and especially to Chinese Yuan reserves....

Zero Hedge

In Troubling Sign For The US, Reserve Managers Plow Into Chinese Yuan, Dump Dollars

Rudy Panko — Iran Dumps Petrodollar, Wants Euros for All Oil Sales

Analysts say that the move is not just politically motivated: Now that sanctions have been lifted, Europe has become one of Iran's top trading partners. So why use dollars?

But the decision seems to be yet another act of defiance against dollar dominance. This week Russia became China's biggest oil partner, thanks in part to Moscow accepting payment in yuan. And last month, Iran and India announced that they intend to settle all outstanding crude oil payments in rupees, as part of a joint strategy to dump the dollar and trade instead in national currencies.…

Exorcising the ghost of Bretton Woods.

Russia Insider
Iran Dumps Petrodollar, Wants Euros for All Oil Sales

Rudy Panko

Joseph Joyce — The Continuing Dominance of the Dollar: A Review of Cohen’s “Currency Power”

Good summary of currencies and why the USD will continue to dominant for the foreseeable future. Short, too.

Angry Bear
The Continuing Dominance of the Dollar: A Review of Cohen’s “Currency Power”

Joseph Joyce

Bill Mitchell — Denmark should abandon its euro peg

In my soon-to-be-published book on the Eurozone I examined the case of Denmark in some detail in the context of the evolution of the European Monetary System, the European Exchange Rate Mechanism (ERM), and the ratification process of the Treaty of Maastricht. Denmark was a participant in all the attempts to maintain fixed exchange rates after the Bretton Woods system collapsed in 1971. Further, while Denmark did not formally enter the monetary union by adopting the euro that doesn’t mean that they have maintained their currency independence. They chose instead to peg the Danish kroner against the euro (effectively continuing the ERM parities), which immediately meant that its central bank had to follow ECB monetary policy. Fiscal policy then became a passive player to ensure it didn’t exacerbate the peg parity and Denmark also bought into the Stability and Growth Pact fiscal rules. This meant that internal devaluation (wage cutting) was the only real counter-stabilisation option available to them when facing external imbalances and domestic recession. It hasn’t worked well as one would expect. In fact, the euro peg works against the interests of the Danish people, particularly low income workers prone to unemployment. Yet the nation has an obsession with maintaining it. Groupthink abounds. The correct policy strategy which would give the Danish government a wider range of policy tools to enhance the well-being of its people would be for Denmark to abandon its euro peg. It should do that virtually immediately.…

The post contains a history of currency unions in Europe and why the euro is another failed experiment.

Bill Mitchell – billy blog
Denmark should abandon its euro peg
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia