In markets, speculators, unable to bet on a yuan pegged to the U.S. dollar, use the currencies of China's main trading partners instead. That has helped make the Australian dollar the fifth-most-traded currency in the world — after the U.S. dollar, the yen, the pound, and the euro — even though Australia is the 18th largest economy.
The full story, on the China-Australia, relationship is here, in the new, revamped, and excellent Bloomberg BusinessWeek.
The Aussie Dollar’s high trade volume has been a fact as long as I can remember, and I am pretty sure it’s true back to the floating of the currency in 1983, so I am wary of an interpretation that uses China trade to explain a phenomena that started only 5 years into China’s reforms.
What? No way. Clearly it’s about China. Everything is about China.
Is the concept of dirty hedging news now?
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