China Looking at Switching from U.S. Dollar Benchmark

China and other BRIC nations (Brazil, Russia, India) have been talking some time about the idea of switching from the U.S. dollar as a benchmark to some other currency arrangement.

One of those possibilities has been to move to a basket of currencies as a benchmark as the measure of an exchange rate for the renminbi, or yuan.

Deputy Gov. Hu Xiaolian of China's central bank said this on their government Web site earlier today.

Hu said, "Compared with pegging to a single currency, the exchange-rate regime with reference to a basket of currencies will help adjust exports and imports, current account, and balance of payment in a more effective manner.

"A floating exchange rate has impact on total imports and exports of an economy. Therefore, the floating cannot be aimed to adjust [only the] bilateral trade balance, and it is not advisable to just look at the [dollar-renminbi] exchange rate.

BRICs Continue Local Currency Pursuit

A growing number of nations are losing confidence in the U.S. dollar, as the endless printing of paper money has increased the pace of the drop in value of the dollar, and its desirability as a currency to do business in, as it's becoming questionable as to its long-term viability on a number of fronts; including whether countries want to continue to acquire the increasingly risky Treasuries, which have propped up the U.S. economy for a long time.

Although it's not the first time BRIC countries have let it be known they are looking for ways to conduct business in their own currencies, the fact that they're continuing to talk and pursue it shows it's not an issue that is going away, and also points to the probable removal of the U.S. dollar in the future as the currency to be traded in, to be replaced by the renminbi or yuan.

China already allows some business to be conducted on a regional basis in its own currency, and that is an experiment to see the potential of expanding to do business in foreign currencies besides the U.S. dollar.

The other thing on the positive side, is it seems to show not only a desire to do business beyond the U.S. dollar, but also that the countries are increasingly confident in the currencies of each country.

Mark Mobius Likes Commodity Countries

Mark Mobius - Commodities in Emerging Markets

Emerging market guru Mark Mobius likes two things about investing in the BRIC countries, and that is consumers and commodities.

The head of Templeton Asset Management said he continues to look for strong performances from countries with strong natural resources and infrastructure and consistency in place to extract and distribute them.

With growing middle classes in BRIC nations, Mobius also likes industries prepared to service them like retail, banking and disposal product firms.

Anyone investing in BRIC economies need to have a longer term outlook to be successful says Mobius, as they are volatile and move up and down quite a bit.

Market timers and other need not apply here or you could get slaughtered from the short term fluctuations of the markets.

Mark Mobius - Commodities in Emerging Markets