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Yuan in freefall

F-22Raptor

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The yuan fell for the 11th straight day on Thursday, taking its losses during the period to 4 per cent against the US dollar.

This decline comes after the People’s Bank of China lowered the currency’s daily fixing rate for a seventh consecutive day, a strong signal that the central bank wants to see a weaker yuan as it gears up for a possible all-out trade war with the US.

The offshore yuan traded at a fresh six-month low of 6.6300 per US dollar on Thursday morning, down 0.2 per cent from Wednesday and 3.8 per cent from June 13, just before its 11-day losing streak began.

The currency has tumbled every day since June 14, when the PBOC opted not to follow the US Federal reserve in increasing the interest rate. Its decline has also tracked the escalation in trade tension between the US and China.

The PBOC set the yuan’s midpoint at 6.5960 per dollar on Thursday morning, down 0.6 per cent or 391 points from Wednesday’s 6.5569, which itself was 0.6 per cent lower than Tuesday. The central bank has lowered the midpoint for the last seven days in a row, reducing it by 2.7 per cent. It is now down 3.1 per cent from June 14.

Lukman Otunuga, a research analyst at FXTM, a British foreign-currency trading company, said the PBOC’s tactic of lowering the official fixing of the yuan was an effort to cushion the effects of trade tariffs imposed by the US. Generally, a weaker yuan helps exporters by making their prices more competitive overseas.

“The yuan has weakened to its lowest level this year against the US dollar with prices punching above the 6.6000 level. It is becoming increasingly clear that global trade developments have weighed heavily on the yuan,” Otunuga said. “While the yuan could recover if trade tensions start to ease, any signs of escalating trade war fears are likely to pressure the currency.”

The yuan has never yet been allowed to trade freely. Its price depends on a daily fixing rate set by the PBOC every morning, around which it can only trade in a range of 2 per cent either side. The fixing rate is therefore seen by the market as a signal of the central bank’s strategy.

After PBOC set the fixing lower, the offshore yuan traded in the international market trade at 6.6300 per US dollar on Thursday morning, down 0.2 from previous close. and is now trading a fresh six month lowest. The yuan now traded at a similar level in mid December.

The onshore yuan, traded in Shanghai, also hit a six-month low of 6.6247 against the greenback on Thursday morning, down 0.4 per cent from the previous close.

Stephen Innes, head of trading for Asia-Pacific at forex trading company Oanda, expected the weak yuan would lead the US dollar higher against other emerging-market currencies during the trade war.

“With the US dollar reasserting itself as the unquestionable hedge against an escalating trade war, there's no escaping the wrath of a stronger US dollar,” Innes said.

http://www.scmp.com/business/bankin...-down-4-cent-11-days-central-bank-arms-itself
 
The yuan fell for the 11th straight day on Thursday, taking its losses during the period to 4 per cent against the US dollar.

This decline comes after the People’s Bank of China lowered the currency’s daily fixing rate for a seventh consecutive day, a strong signal that the central bank wants to see a weaker yuan as it gears up for a possible all-out trade war with the US.

The offshore yuan traded at a fresh six-month low of 6.6300 per US dollar on Thursday morning, down 0.2 per cent from Wednesday and 3.8 per cent from June 13, just before its 11-day losing streak began.

The currency has tumbled every day since June 14, when the PBOC opted not to follow the US Federal reserve in increasing the interest rate. Its decline has also tracked the escalation in trade tension between the US and China.

The PBOC set the yuan’s midpoint at 6.5960 per dollar on Thursday morning, down 0.6 per cent or 391 points from Wednesday’s 6.5569, which itself was 0.6 per cent lower than Tuesday. The central bank has lowered the midpoint for the last seven days in a row, reducing it by 2.7 per cent. It is now down 3.1 per cent from June 14.

Lukman Otunuga, a research analyst at FXTM, a British foreign-currency trading company, said the PBOC’s tactic of lowering the official fixing of the yuan was an effort to cushion the effects of trade tariffs imposed by the US. Generally, a weaker yuan helps exporters by making their prices more competitive overseas.

“The yuan has weakened to its lowest level this year against the US dollar with prices punching above the 6.6000 level. It is becoming increasingly clear that global trade developments have weighed heavily on the yuan,” Otunuga said. “While the yuan could recover if trade tensions start to ease, any signs of escalating trade war fears are likely to pressure the currency.”

The yuan has never yet been allowed to trade freely. Its price depends on a daily fixing rate set by the PBOC every morning, around which it can only trade in a range of 2 per cent either side. The fixing rate is therefore seen by the market as a signal of the central bank’s strategy.

After PBOC set the fixing lower, the offshore yuan traded in the international market trade at 6.6300 per US dollar on Thursday morning, down 0.2 from previous close. and is now trading a fresh six month lowest. The yuan now traded at a similar level in mid December.

The onshore yuan, traded in Shanghai, also hit a six-month low of 6.6247 against the greenback on Thursday morning, down 0.4 per cent from the previous close.

Stephen Innes, head of trading for Asia-Pacific at forex trading company Oanda, expected the weak yuan would lead the US dollar higher against other emerging-market currencies during the trade war.

“With the US dollar reasserting itself as the unquestionable hedge against an escalating trade war, there's no escaping the wrath of a stronger US dollar,” Innes said.

http://www.scmp.com/business/bankin...-down-4-cent-11-days-central-bank-arms-itself

Clueless. A stronger dollar would only increase the trade deficit. Chinese currency is managed, and the fall is counter to the tariff.
 
Clueless. A stronger dollar would only increase the trade deficit. Chinese currency is managed, and the fall is counter to the tariff.
Not always. It hurts China too, when China goes shopping for minerals and petroleum.

Plus, it can only increase trade deficit when other side(s) is ready to soak up production. If Trump again creates trade barriers, it will only hurt China. What you were selling 1 unit for 10$ now fetches only 9.5$ per unit. It only works in your favour if the other party buys more than one unit. If not, your are losing money.
 
USA keep accusing China of currency manipulation (keeping large USD reserve to move CNY lower). Meanwhile using Wall Street to attack the currencies any other states having low reserve. That is how one get the Mexican peso crisis, Argentinan crisis, 1997 SE Asia currency crisis....etc

On the other hand, Chinese netizen (a lot of them are government sponsored 5 cent gang) keep accusing USA of spending beyond means. When USA tries to re-industrialized by moving away from free trade, China bash USA as well.

This is issue need to be view holistically.
 
China and USA could engage in a race to the bottom currency war.

The untold message of this trade war is, China want to sell the USA in exchange to massive amount of useless fiat USD papers and becoming USA creditor. (That many argued that the debt wont be returned)

While Trump and his patriots refuse to buy anymore, to put her own balance sheet in order.

So who is right and who is wrong?

The USA free trade globalist and advocates have went to far into the phoney theory of free trade and globalization that many now cant see in the other prism.

What if China keep everything she produce to her own citizens, by raising her citizen income?

What if USA decide that her citizen spend to much and need to spend on their own means.

The rebalancing will result in a massive restructuring of economy in both side.
 
What if China keep everything she produce to her own citizens, by raising her citizen income?
Western production will restart and Chinese currency will fall even faster. Then some other country(ies) will take up the place of China.

What if USA decide that her citizen spend to much and need to spend on their own means.
This is not how it works. Unlike China, in west so long banks wish to give you credit, there is no one who can stop you from spending. And most of the banks are private.
 
Lol,Free fall my ***.

It's true that Yuan is losing value against Dollar ,but the problem is other currencies around the world is losing value against Dollar much more quickier than Yuan in the last few month,Infact Yuan is actually rising against most of currencies around the world ,So PBOC decide to devalue the Yuan since last week in order to keep CFETS-BOC Bond Index stable.Check the link below you will know what I mean
http://www.chinamoney.com.cn/english/bmkidxrud/
Pi7ySs.png



This is why I said before ,its meaningless to talk about Yuan‘s rising or falling against Dollar because everyone knows PBOC‘s main target is to keep RMB Index stable.They don't only care about Dollar but also care about every main currency in the world after 8.11.2015

Western production will restart and Chinese currency will fall even faster. Then some other country(ies) will take up the place of China.


This is not how it works. Unlike China, in west so long banks wish to give you credit, there is no one who can stop you from spending. And most of the banks are private.
From what you post I can safely say you don't know shit about how currencies work espacially about Yuan,read what I posted above,the problem Yuan facing right now is not even falling but rising.Yuan is rising so fast in the last few months,so i am glad PBOC is doing something very effectively to stop this rise
 
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From what you post I can safely say you don't know shi t about how currencies work espacally about Yuan,read what I posted above,the problem Yuan facing right now is not even falling but rising
Point out which portion you have objection on.
 
Yuan is rising too fast against most of currencies in the last few months ,so PBOC said “stop“ since last week,did I make it clear?
How is this relevant to my posts? Did I said otherwise or in contrast?
 
Western production will restart and Chinese currency will fall even faster. Then some other country(ies) will take up the place of China.


This is not how it works. Unlike China, in west so long banks wish to give you credit, there is no one who can stop you from spending. And most of the banks are private.

The world need some form of manage trade instead of free trade. It is unfair to pit high income citizens against the 3rd world workers.

Banks are subjected to regulations. Just need a piece of paper like Glass-steagal to rein them.
 
How is this relevant to my posts? Did I said otherwise or in contrast?
Do you even know what CFETS-BOC Bond index means?When you talking about Yuan is falling and it will fall even faster, it only made me laugh ,pls educate yourself before posting anything about Yuan,let me mind you that Yuan is not even a free-floating currency
 
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Do you even know what CFETS-BOC Bond index means?When you talking about Yuan is falling and it will fall even faster it only made me laugh
You still fail to tell me why is this relevant to what I posted.

The world need some form of manage trade instead of free trade. It is unfair to pit high income citizens against the 3rd world workers.
I don't have enough knowledge to say what world needs. Its a normative argument and usually such arguments are very hard to get right. What "should be" the norm is extremely hard to get correct. What is "fair" and "unfair" is again a very hard to decide question.
 
You still fail to tell me why is this relevant to what I posted.
Because Yuan is not a free-floating currency,anyone here predicting Yuan will fall or rise is laughable,if other currieces rise Yuan will follow,if other currencies fall Yuan will follow too,PBOC 's mainly target is just to ensure RMB index stable
 

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