According to Duke University, two thirds of U.S. exporters say “the appreciation of the dollar has had a negative impact on their businesses. And nearly one-fourth of big exporters said they have reduced their capital spending plans as a result…’We are in a midst of an ugly contest to see whether the eurozone, Japan or Canada can depreciate the most against the U.S. dollar, and China is probably next.” There is a growing debate over this last point. On the one hand, Chinese exporters would benefit from a depreciated currency much in the same way people are expecting German exporters to benefit from a depreciated euro. On the other hand, China is in the middle of attempting a massive rebalance away from export and investment driven growth, and the $US denominated debt on Chinese corporate balance sheets doesn’t help either. Which brings us to this: “Britain’s announcement Thursday that it intends to join the Asian Infrastructure Investment Bank, which China is largely funding in hopes of becoming the dominant influence in Asian affairs, has bolstered the fledgling bank’s reputation even before it begins operations…Washington views the Chinese venture as a deliberate challenge to [the World Bank and other global financial institutions], which are led by the United States and, to a lesser extent, Japan.” Some are expecting this decision to influence authorities in South Korea and Australia who “have seriously considered membership but have held back.” “Having South Korea as a founding member would be a considerable coup for Beijing.” Someone in the Obama administration even went so far as telling the Financial Times that they are worried about Britain’s “constant accommodation” of China (alt). Draaamaaa. Meanwhile, “in the past year, the dollar’s share of total global financial transactions grew to more than 43 percent from a bit less than 39 percent…At the same time, China’s currency became the world’s fifth favorite medium of exchange, up from seventh at the start of 2014.” And here’s something fun: Bank of China has a billboard up outside of Bangkok International Airport advertising the renminbi as the “new choice” for “the world currency”. “China is literally advertising its currency overseas, and it’s making sure that everyone landing at one of the world’s busiest airports sees it…They know that the future belongs to them and they’re flaunting it.”
Meanwhile, is the February bounce done?