(H/T Gold Silver Worlds)
Gold prices climbed to their highest level since Sept. 10 last week, breaking above the $1,250 an ounce level.
Gold’s outlook this week will depend largely on the Federal Reserve policy meeting, when the U.S. central bank is widely expected to end its bond-buying stimulus. The Fed’s two-day meeting, which begins today will also be watched for clues on whether any slowdown in Europe or elsewhere could affect the central bank’s monetary policy.
On Monday, October 27, some of the biggest financial news of the year made huge waves all over Asia. Yet in the Western press, this hugely important event was barely even been mentioned.
The Chinese government announced that the Renminbi or Yuan will become directly convertible with the Singapore dollar effective Tuesday, marking another step toward internationalizing the Chinese currency.
The announcement by China Foreign Exchange Trading System (CFETS) extended the yuan’s list of direct onshore trade to more major currencies, including the U.S. dollar, the euro, British sterling, Japanese yen, Australian dollar, New Zealand dollar, Malaysian ringgit and Russian rouble.
With direct trading of their currencies, China and Singapore will be less dependent on the U.S. dollar to settle bilateral trade and investment deals.
Previously, the exchange rate between the two currencies was calculated based on the yuan-U.S. dollar central parity rate and the Singapore dollar-U.S. dollar rate.
Now that the two currencies can be directly traded, the yuan-Singapore dollar rate will be set based on the average prices offered by market makers before the opening of the interbank foreign exchange market.
The Chinese government is gradually relaxing its hold over the yuan and making it a global reserve currency.
China is also under pressure to diversify its foreign exchange reserves, which stood at 3.89 trillion U.S. dollars at the end of June.
According to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), international bank payments denominated in yuan have nearly tripled in value in the past two years.