Jim Rogers started trading the stock market with $600 in 1968.In 1973 he formed the Quantum Fund with the legendary investor George Soros before retiring, a multi millionaire at the age of 37. Rogers and Soros helped steer the fund to a miraculous 4,200% return over the 10 year span of the fund while the S&P 500 returned just 47%.

Tuesday, January 11, 2011

Chinese Foreign Currency Reserves Show Record Leap

China's foreign exchange reserves rose in the fourth quarter of 2010 by a record $199 billion, an additional indication of the country's worsening inflation problems.

China's reserves, which are the largest in the world, increased by 18.7% in 2010, including an increase of $194 billion in the third quarter.

The reserve increase further adds to inflationary pressures exacerbated by China's recent monetary policy, which includes strong bank lending and a rising supply of renminbi (RMB). The country's central bank, the People's Bank of China, has been rapidly printing the Chinese currency to buy up foreign currencies, such as the dollar and euro, due to trade surpluses and foreign investment.

Eswar Prasad, former head of the IMF's China division, told the Financial Times, ""China's continued strong bank lending and massive reserve accumulation could be bellwethers of trouble to come. They throw cold water on the notion that macroeconomic policies have the economy under control and have struck the right balance in keeping growth high while preventing overheating.""

The issue of additional RMB may also be an impetus for American officials to increase pressure on China to increase the valuation of its currency.

According to Bloomberg Businessweek, President of Brazil, Dilma Rousseff, will make China's trade and currency policies a "priority" during her visit to China in April.

Currency and trade issues will most likely also be featured strongly when Chinese President Hu Jintao makes a state visit to the U.S. next week.

Jim Rogers : The Renminbi can replace the US dollar down the road

Jim Rogers :"...The only currency on the horizon that I see that will replace the US dollar is the renminbi. It is an absurd statement that the renminbi is a black currency right now, but that is the only currency that I see where I know I will make money. I own other currencies like Singapore dollar, Japanese Yen, Euro, but I am skeptical of the US dollar. I do not own the pound sterling. I see no future for the pound sterling and the only thing I see can replace a dollar is the renminbi down the road, but may be governments continue to debase paper money, we may all have real assets. ..."

Jim Rogers Long The US Dollar, Short Emerging Markets ETF

Jim Rogers :"...I own the US dollar at the moment because there have been many-many sceptics on the US dollar. I expect it to rally for a while. I do not know whether I would own it for a week or a month or a year. I just do not know. I do know that as long as there are many-many skeptics, there is a good chance that it will rally, there are some things going on in the US which may cause the rally to go even further. I am not selling my dollars if it goes down, I might even buy more US dollars, but longer term the US dollars may be in terrible-terrible shape. It is a very flowed currency; I do not plan to own the US dollar 5-10 years from now at all and may be sooner. ..."

Via ET Now
Jim Rogers "the 19th century was the century of the UK , the 20th century was the century of the US , the 21 st century is going to be the century of China "
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