US Dollars – Chinese Yuen, are they wise investments? China has once again devalued its currency and taken the additional step of removing financial incentives for the production of aluminum. Aluminum is a process that requires enormous use of fossil fuel. China has been trying to export its surplus into a glutted global aluminum market.
The yuan is the unit of currency in this rapidly industrializing nation. They are favored trading partners of the USA who a re deeply in debt to China. Many manufacturing processes are outsourced to China by first world nations. Unfortunately this has unfortunate side effects. One is the reduction of employment in developed nations. Others are the risk of shoddy goods, unethical practices and knock-offs.
Knock-offs are imitations of the original without the standards set by the contractor and they often contain ingredients or are manufactured to dangerous standards. Throughout North America humans and pets have suffered kidney damage from poisonous food ingredients. No compensation has been offered to date.
Most of the world’s trade is conducted in US Dollars. In some instances the Euro is taking over. North Korea and Iran are two of the nations that choose to use the Euro and the possibility exists that others will follow suit. The United States has the title of the world’s most hated nation followed by the United Kingdom in second place.
Choosing a currency in which to invest is a separate matter. The Yuan is rocky despite enormous growth potential. The Chinese have suffered two meltdowns of their stock exchange in the past six months. They are currently suffering from huge floods, some of which is caused by choking streams and rivers with garbage. The garbage is collected globally by Chinese interests and reprocessed with little care for the employees or environmental damage.
For investment purposes I would recommend the Euro with its widespread base, the Canadian dollar, because house prices are still rising in Canada unlike the USA where house prices have crashed. The Pound sterling – GBP is also strong. The British housing market is constantly increasing in value and attracting global investors.
Hedging ones investment with some Asian currencies and US dollars in the background can be wise. The European Euro is unlikely to collapse economically because it has the backing of over twenty nations. China and its currency have too many fluctuations and the USA is in a parlous financial situation at home and abroad. Canada is heavily into growth, but your investment in Canadian dollars may be limited by the lack of Government directed environmentalism which could have future disastrous repercussions.