Almost none of the Global Pensions 100 Panel believe the US dollar will be replaced by the yuan as the world's reserve currency.
The results go directly against claims by ING’s Asian CIO Pranay Gupta this month that he expects the yuan to become a reserve currency within the next two years driven by the ongoing debt problems in Europe and the US.
He said the yuan will continue to appreciate as China seeks to control inflation and assets continue to move away from developed markets.
“For the moment therefore, despite what happened in the CNY last week, one should rule out sudden revaluations of the CNY in favour of continued gradual appreciation,” he added. “What is happening however as a result of the US and European crisis, is a much faster pace at which the CNY will become a core reserve currency, and acquire safe haven status.
“Spurred both by the demand from central banks around the world, and perhaps the solution to China’s problem of local government debt, one should not be surprised if the CNY acquires this status within the next two years.”
Panel members disagreed however, claiming there is still “insufficient trust in the Chinese”. One said there was “not a hope that a manipulated currency in a non-democratic country that is not freely traded can become a credible alternative to the US dollar”. Another respondent believed rather than replacing the dollar, the yuan “will simply become another reserve currency”.
Just two respondents agreed with Gupta’s claim, but did not give their reasons.
The Global Pensions 100 Panel was launched in July 2006 and every month asks pension funds two topical questions on events in the pensions industry.
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