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China devaluing the Yuan

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China stuns financial markets by devaluing yuan for second day running

Stocks, currencies and commodities fall sharply across region as investors fear a stalling China economy and possible currency war despite Beijing’s assurances

 

http://www.theguardian.com/business/2015/aug/12/china-yuan-slips-again-after-devaluation

 

Where will this stop i wonder?

 

 

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"Further to go? 6.60 - 6.70 maybe" - that's my guess now

 

(First, Henny Sender, writing in today's FT):

 

Slowdown in China is going to be harder for its trading partners, pg 22

 

+ Citigroup is now suggesting shorting 9 currencies (Is it time to Buy them maybe?):

NKR, Ruble, MYR, AUD, NZD, TWD, THB, Korean Won, Chilean peso

(most of which are already near their low against the USD.)

 

+ The logic is: China is slowing, and commodities will fall, and it will buy less from its major trading partners

"China may be slowing more than the official data suggest" (growing at 5%, instead of 7%?)

 

+ We should also see a reversal of asset appreciation, and tighter money policy

 

+ Many of the trading partners have been too optimistic about China's growth and invested too much

in betting on business with China - Bank credit in emerging Asia hit an alltime high of 113% of GDP: Q1-2015

 

(Now, my charts):

 

USDCNY / Chinese Yuan (CURRENCY) ... update : Further to go? 6.60 - 6.70 maybe

6.4263 arrow_up_sm.gif +0.1008 : + 1.59%

CNY_zpsixjgctio.gif

 

+ implied by the China slowdown, are negative second-round effects.

One back to watch is Standard Chartered, with its $50bn in commodities exposure

 

UK:STAN / Standard Chartered PLC ... update

STAN_zpsmrkt7nqe.gif

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DJIA is YTD negative and threatening to set new 12m lows.

The bull looks dead to me. It will take nothing short of QE-infinity to rescue this now.

 

I think we will get THAT eventually, but maybe not yet.

Though, I must say, China is showing signs of desperation - or may it is just retaliation for the US

not allowing the Rmb in, as part of the SDR

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China Yuan Move Was Expected And More Surprises To Come - Trends Expert

By Daniela Cambone
Wednesday August 12, 2015 15:01

NEW YORK (Kitco News) - While the move by China to devalue its currency shook the financial world, one trends forecaster said he was expecting it, and a global market meltdown is next.

Speaking to Kitco News, Gerald Celente, publisher of the Trends Journal, said he was completely unfazed by the China news. He explained that on July 24, China’s State Council telegraphed the move when it announced a series of measures to pump up the economy and boost declining exports. “Although it wasn’t reported as such, it was clear to the (Trends Research) Institute the yuan would be devalued,” he said.

 

Gerald-Celente-300x375-290x310.jpg

On Wednesday, China's yuan hit a four-year low, falling for a second day after The People’s Bank of China devalued it by close to 2%. Spot yuan in China slid to as low as 6.4510 per dollar, its weakest since August 2011. China’s central bank set its daily midpoint reference at 6.3306, even weaker than Tuesday's devaluation.

China has been implementing economic and monetary measures to resuscitate its flagging economy. The weaker yuan will make imported goods into China more expensive. It will also make Chinese-produced goods cheaper on the world export market.

But Celente said he believes that China can’t save itself and the move was ‘an act of desperation.’ “That’s not going to get them out of this. You’ve got a bunch of rookies playing in a big game over there and they don’t know how to get out of it. They are trying to salvage the country in any way they can.”

But Celente said China is not the only problem, and other global surprises will come. “China is the canary in the equity mine shaft – we are looking at a global equity meltdown that will happen before the end of this year. And the way things are going, it may happen before the end of this week,” he added jokingly.

As for gold, Celente said the metal is obviously benefitting from the China news. Gold futures hit their highest level in three weeks Wednesday. As of 1:34 p.m. EDT, Comex December gold was up $15.40, or 1.4%, to $1,123.10 an ounce.

He explained that gold is maintaining its value as currencies are going down. “I never bought gold as a hedge to inflation, I bought it as a hedge against global instability, about currencies being devalued,” he said.

Celente said the bottom for gold could be $150 to the downside – noting the risk is very low. On the upside, he could see gold over $2,000 an ounce. Whether either scenario could happen this year, Celente said anything is possible.

 

> http://www.kitco.com/news/2015-08-12/China-Can-t-Save-Itself-Downside-Risk-For-Gold-is-Very-Low-Celente.html

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http://www.zerohedge.com/news/2015-08-12/china-devalues-yuan-3rd-day-4-year-lows-argentina-suffers-losses-japan-escalates-cur

 

Chinese Devaluation Extends To 3rd Day - Yuan Hits 4 Year Low, Japan Escalates Currency Race-To-The-Bottom Rhetoric

 

The "one-off" adjustment has now reached its 3rd day as The PBOC has now devalued the Yuan fix by 4.65% back to July 2011 lows.

 

China’s devaluation couldn’t come at a worse time for Argentina - about a quarter of the country’s $33.7 billion of foreign reserves are now denominated in yuan, which suffered its biggest loss since 1994 on Tuesday.

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http://bulawayo24.com/index-id-business-sc-economy-byo-72245.html

 

Zimbabwe adopts Chinese yuan as legal currency

 

The move by Zimbabwe signifies the expansion of the yuan into the global trading market....

 

In 2009, Zimbabwe adopted the US dollar and the South African rand. In 2014, Zimbabwe announced it would accept more foreign currencies, including the Japanese yen, the Australian dollar, the Indian rupee, and the Chinese yuan. However, in practice, the US dollar has been dominant in local markets.

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Article contending that China will NOT move to a gold standard

http://www.debtcrash.report/entry/china-crash-in-context

 

... There are rumors, with admittedly convincing research, indicating China could have 10 or even 20 thousand tons of gold. They reason if the credit created bubble collapsed they could simply back the yuan with that gold. This certainly may be an option, but the question is whether the Chinese Government would be willing to give up control of the monetary system, and be restricted by a gold standard. Shifting to a gold standard would be.... a voluntary abandonment of further credit expansion, and would allow the crash to play out.

 

China has a historically fickle population that is quick to protest and revolt. This is always a primary fear of the government which has used the credit created boom to placate the masses. A gold standard would put the power in the hands of the population, not the government.....

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