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Bill Gates Picks Yuan Over Dollar: Find Out Why
Aspire, Thought Leaders | 13 May 2015
By: Vance Wong
Articles (74) Profile

Source: CNBC

In a recent CNBC interview, when asked about currencies and which one he would bet on for the next 10, 20 or even 50 years, Microsoft chairman Bill Gates chose the Chinese Yuan. One might think that the billionaire computer revolutionist would rather bet on the Dollar, but Gates has his reasons.

With China slowly opening up its economy to the world and also allowing the Chinese Yuan to float in the market, it is no wonder Gates would place his bet on a currency of an economic power house, China.

Chinese Yuan Over US Dollar

Source: Livetradingnews

Gates explained his choice: the Dollar is the global reserve currency and is bound by certain rules that makes it naturally strong even if the underlying US economics are unable to support its strength.

As such, the Dollar might not actually be a safe bet in the coming years, especially when the US economy is facing core economic issues now. Furthermore, no one can be certain about the interest rate hikes this year. This is particularly important as we look at the Quantitative Easing policies and negative interest rates in the Euro-zone.

Gates thinks that the Chinese Yuan is a fairer currency simply because of China’s economics being able to back the currency up. Additionally, the International Monetary Fund (IMF) is “close to declaring China’s Yuan fairly valued for the first time in more than a decade.”

Therefore, with the increasingly uncertainty of the US market in view of the interest rate hikes and strong Dollar, Gates feel that a safer and better bet would be the Chinese Yuan. Furthermore, with China’s economy opening up and having its Shanghai Free Trade Zone (SFTZ), there is no doubt in the superpower’s potential now and in the future.

China To Soar With FTZ Launches

Source: Businessinsider

It has been almost two years since SFTZ’s debut and it is reported by Xinhua, a Chinese news outlet that the “number of businesses operating in the zone over the past year has grown from 8,000 to 20,000.”

China had so far set up three more Free Trade Zones (FTZ), one of which in its biggest province, Guangdong. According to Bloomberg, Guangdong has an economy that is worth US$1 trillion. Guangdong’s FTZ will “fuse the province’s economy more closely with Macau and Hong Kong’s and boost yuan-denominated trade and financing.”

The launch of these FTZs in China is all part of the efforts of China’s leaders Premier Li Keqiang and President Xi Jinping in pushing for a more open Chinese economy with “fewer financial restrictions and more innovation.”

With the slowly but increasingly liberalised Chinese economy, Microsoft’s co-founder and chairman Bill Gates sees a more attractive future in the Chinese currency as compared to the Dollar.

If the Chinese economy continues in the right direction, with gradual release of government control to allow the market to adapt to the global financial landscape, it is clear why Gates thinks that the Chinese Yuan is going to be one of the currencies to look at.

With a Communications background, Vance has the passion to write with a purpose - to provide content supported with substantial evidence to vested readers.

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