Spring 2015 6

Is Chinese Currency a Threat to the U.S. Dollar?

by A. Scott White, CFP®, ChFC, CLU

Perhaps you’ve seen articles in the media about the possible threat of Chinese currency taking over the dollar for use in international trade. The Asia Infrastructure Investment Bank is positioning itself as an Asia-centric alternative to the World Bank and International Monetary Fund. yuanConsequently, the IMF is now recognizing Chinese currency, and people who preach doom and gloom say it’s the beginning of the end for the U.S. dollar.

I do not speculate, but I know that since the Chinese hold over a trillion dollars in U.S. government debt in their currency reserve accounts, it would ultimately harm China if the Chinese did anything to cause a collapse in the value of the dollar. In any country, the heart of my investment philosophy is companies that produce the goods and services that people want, and can sell those goods and services for a profit. It won’t matter that much if the profits are reported in U.S. dollars, Chinese yuan, or Japanese yen. As long as investors invest in companies that do business, people will still want to buy goods and services they produce—and it doesn’t matter what their currency is. This development, however, is a good example of why Scott White Advisors recommends diversifying investment portfolios globally.

 

The information contained in this report does not purport to be a complete description of the securities markets or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing materials are accurate and complete. Any opinions are those of Scott White Advisors and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date subject to change without notice. Past performance may not be indicative of future results. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Strategies discussed may not be suitable for all investors. Investing involves risk and investors may incur a profit or loss regardless of strategy selected. Diversification does not ensure a profit or guarantee against a loss.

The information contained in this report does not purport to be a complete description of the securities markets or developments referred to in this material. The information has been obtained from sources to be considered reliable, but we do not guarantee the foregoing materials are accurate and complete. Any opinions are those of Scott White Advisors and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and subject to change without notice. Past performance may not be indicative of future results. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Strategies discussed may not be suitable for all investors. Investing involves risk and investors may incur a profit or loss regardless of strategy selected. Diversification does not ensure a profit or guarantee a loss.