Currency Markets

I still do some foreign currency investments, which basically means I keep some CDs in RMB waiting for some more appreciation to happen. I also bought VE, a European stock that pays a nice dividend, when the Euro was weakish.

Anyways, this article interested me. Basically the gist is that China will try to trade with Brazil using their own currencies and not the US dollar. Nothing hard about that, except that for some reason these sorts of exchange rates tend to simply follow the dollar.

Let me explain via the NT$. Theoretically, I thought there should be a separate market for US$/NT$ exchanges and another  one for €/NT$ exchanges, but they instead simply follow US$/€ relationships. So, if its NT$ 44/€, its probably because the US$ is weak vs. the Euro and not because there is some strong demand for Euros in Taiwan due to trade, investment, etc.

I suspect the RMB/Real will have a similar relationship where the exchange rate is simply a proxy of RMB/USD and Real/USD - so does it really hurt the US dollar as a reserve currency when they trade like this? 

I don't know - I could even be wrong about my experience with the TWD.

But I would suggest that unless you really need USD, to not hold too many of them.

PS: Or am I dumb and the market is so huge and strong that its simply an equation of US$ =NT$ = €, so that any changes are so swiftly computed that it looks like the NT$ is unimportant?