Look Out, Dollar: The Yuan Will Keep Surging, Says Ray Dalio

Just a minor player globally, the Chinese currency will expand its use a lot over the next decade, the hedge fund honcho predicts. 


The demise of the US dollar’s worldwide eminence has been foretold many a time. Still, it remains the globe’s reserve denomination. But watch out for a comer currency, whose rise will be faster than anyone expects.

That’s Ray Dalio’s take. The yuan will reach 5% to 10% of global foreign exchange reserves in five to 10 years, he predicted, versus 2% now. The dollar, according to the International Monetary Fund (IMF), has a daunting 60%.

No one is saying that the buck is in danger of losing its prominence as the world’s reserve currency, yet prognostications are abundant that China’s faster-growing economy will be bigger than the US’s come 2030 or 2035.

As a result, China will increase its sway in global trade and financial transactions as the years roll on, which will in turn boost the yuan, Dalio told CNBC.

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“So, on the margin,” said Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund firm, the yuan will “become a more significant, a strong currency, stable currency, more attractive-returning currency, and also a more widely used currency.”

The rise of the yuan “will happen faster probably than most people expect,” the billionaire financier said.

Another factor aiding the yuan’s increased importance is Beijing’s efforts to digitalize the currency, thus boosting its use internationally. Dalio said the digital yuan would be “a very viable alternative” for investors. While he contended that the US would one day follow suit with a digital dollar, he cautioned that expanding American debt levels could temper that movement.

To succeed, the digital yuan would need to be accepted globally and buoyed by enticing Chinese interest rates, he added. The second condition already is a reality.

The 10-year Chinese government bond has a 3.1% yield, almost double that of the equivalent Treasury note. At present, however, China’s sovereign debt is not traded much beyond its borders. That, certainly, could change. Goldman Sachs Asset Management argued in a recent paper that China’s large bond market was “too big to ignore.”

Gradually, the foreign exchange field has changed to accommodate China. In 2016, the IMF added the yuan to its basket of major reserve currencies, also known as special drawing rights.

The near-term yuan-dollar picture is more complicated. Right now, the dollar has weakened—it‘s off 7% against the yuan since the start of 2020—meaning, of course, that the Chinese currency has strengthened.

The People’s Bank of China (PBOC), its central bank, in general doesn’t like the yuan to get too pricey, as it could hinder the nation’s export machine. with the pandemic’s seeming ebb, the Asian giant’s exports are roaring ahead. But the government’s cheaper-yuan desire is a policy that has been tempered lately, given the Beijing regime’s push to expand China’s consumer economy.

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British Airways Pensions Transfers $30 Billion in Assets to BlackRock

Intensifying regulation, rising operational costs, and increasingly complex investments were cited by the beleaguered airline. 


British Airways Pensions has transferred management of its two main retirement systems totaling nearly $30.4 billion (£21.5 billion) in assets to the outsourced chief investment officer (OCIO) business at BlackRock. 

The transfer is among the largest of its kind in the United Kingdom, the firm said Wednesday. The agreement affects assets under the Airways Pension Scheme (APS) and the New Airways Pension Scheme (NAPS), as well as more than 85,000 members. 

“This agreement is the necessary next step in the evolution of the Schemes as they look to enhance their respective investment strategies, working toward their funding goals,” Roger Maynard, chair of trustees at APS and NAPS, said in a statement. 

“In BlackRock, we have identified an asset manager that will ensure the continued focus on delivering enhanced oversight, investment management, and long-term value for the Schemes in the interests of our members,” he added. 

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Intensifying regulation, rising operational costs, and increasingly complex investments were cited by British Airways as reasons to seek external management for its liabilities. Those pressures intensified last year, when the beleaguered airline carrier put off making pension contributions after the pandemic grounded flights worldwide. 

In February, British Airways sought a deferral for a $637.7 million contribution (£450 million) to September. At the same time, its parent company International Airlines Group, also sought a $2.8 billion (£2 billion) loan guarantee. 

Of course, British Airways had been limiting its defined benefit liabilities for some time. In 2018, the company closed two of its pension funds to future accruals for participants,  and contributions, instead replacing both with a defined contribution plan with flexible benefits. 

The same year, the carrier insured nearly $7.5 billion in assets under the APS system through pension risk transfer to Legal and General Assurance Society, in what was the biggest annuity deal of its kind in the UK at that time. 

Now other employees will also be transferred under the agreement to BlackRock, including all members under the British Airways Pension Investment Management Ltd (BAPIML) and some employees of British Airways Pension Services Limited (BAPSL). More than 85,000 members are under the company. 

The transition of assets was completed June 1. 

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