Yuan

Tyler Durden's picture

Market Testing PBoC Resolve And Yuan Trading Band, Bidding Up CNY





The market just added one more bank to its daily intervention watch. The PBoC, which left the CNY fixing unchanged from Friday at 6.8275, is now being tested by the market, which is trying to determine what the real trading band is. At last check, the USDCNY was at 6.8125. So far the daily band has been pushed beyond 0.002% and the PBoC has not yet intervened, or at least not in a manner comparable to that we have grown to love and disrespect from the SNB. In the meantime, just so there is no confusion, Former Chief Executive of the Hong Kong Monetary Authority, Joseph Yam says the "Yuan may appreciate or depreciate in short-term." Well, that now makes it all clear.

 
asiablues's picture

Chinese Yuan: Bent But Not Bowed





On Sunday, the People's Bank of China (PBOC) has ruled out the one-off revaluation that US politicians had sought. For now, analysts still expect the yuan to slowly rise. Meanwhile, the decision by China should not have come as a surprise as there are several major risks should China implement a faster yuan move as favored by many.

 
Tyler Durden's picture

What Renminbi Float? PBoC Leaves USDCNY Unchanged, Weakens Yuan Versus Euro





Somebody forgot to give the PBoC the memo about that whole "PBoC eliminating the dollar peg" thing. According to the just released fixing by the Chinese Central bank, the USDCNY today was at 6.8275, the exact same as Monday. And adding just a little insult to injury, the PBoC devalued the CNY against the EUR by juar under 300 pips: from 8.4538 to 8.4825. That's ok though, the HFT brigade already has its wax on, er, risk on, no volume marching orders.

 
Tyler Durden's picture

China To Announce New 4 Trillion Yuan Stimulus?





What do you do when your last multi-trillion stimulus is expiring and its effects no longer generate asset bubbles as you once did? Why, you launch another multi-trillion stimulus of course, although if you are the US you call it something funky like Pennies for Prosties, Benjies for Bodyrubs or something comparable. China has no problems with nomenclature so it calls it how it is: as Bloomberg observes, "China will announce in August a new stimulus package of possibly 4 trillion yuan ($586 billion), the China Business newspaper reported on its Web site, citing unidentified sources. The plan, from China’s National Development and Reform Commission, will likely cover nine industries including information technology and new energy, the report said." So much for monetary prudence. At this point all economies will spend money into overdrive until each and every economy (that can print its own currency) simply implodes into a Keynesian supernova.

 
Tyler Durden's picture

Gary Shilling On The Chinese Excess Capacity "House Of Cards", Sees Yuan Dropping If China Relaxes Controls





Gary Shilling is now firmly in the anti-China contrarian bandwagon. In this interview with Bloomberg's Erik Schtazker the legendary investor, who called Japan's lost decade when everyone was just as bullish on Japan as Goldman is now on China, Shilling shares the same view on Chinese record excess capacity as Hugh Hendry did some months ago: "You can't trust the [Chinese] numbers... They have kickstarted their economy in the last year - it's a stop go economy, they can do it fast, they don't have to worry about EPA audits, they just let the bulldozers roll when they want to build a new road or whatever. The point is they build an awful lot of excess capacity and the question is how are they going to use it because American consumers aren't buying their exports the way they used to and their domestic economy isn't that strong... Chinese consumer spending is 36% of GDP and is a declining share over the last two decades. They don't have a a big enough middle class. In China there were 110 million people with over $5k per capita income, enough to give them discretionary spending but that was only 8% of the population. In this country it is 80% of the population." And on the yuan: "If they took off all the controls and Chinese could invest abroad, the yuan would probably go down because people would want to diversify... I think the political leaders are aware of that possibility they sure don't want to be pushed around, and Obama made a huge in trying to push them again. Remember China was dominated by European in the last century and they want to run their own country." While we completely agree with Schilling, we believe that the current transformation in US society, which is in the last throws of contract abrogation, in not paying mortgage and credit card bills, we may well see a last push in Chinese imports, after which any disposable income in the US middle class will plunge and will take the US economy down with it as well. The problem, as we have repeatedly pointed out, the cash return on such "assets" as iPads and Kindles is zero, not nearly enough to pay down 39.95% APR credit cards.

 
asiablues's picture

Overtaking the Dollar: The Three Phases of Yuan





Over the last ten years, the Renminbi (RMB) or yuan, has been slowly gaining influence in the markets that surround mainland China. And about one year ago Hong Kong introduced a new trade settlement that allowed Hong Kong business’ to use the RMB as a trading currency. In a China Daily interview, Dr. Billy Mak, Associate Professor in Finance at Hong Kong Baptist University believes the yuan overtaking the dollar will happen in three phases.

 
Tyler Durden's picture

China Considering Expanding Yuan Trading Band





In what could be a first step to appeasing the US and its requests for CNY revaluation, Caijing has reported that China may be considering expanding the daily yuan trading band. The yuan currently fluctuates up to 0.5% around the central CNYUSD parity set by the PBoC - today, for example, the CNY was stronger by 1 pip from 6.8264 to 6.8263. As reported by Market News, citing an
unidentified Chinese government source, "If the central bank does not want to see a quick rate hike, a
better way to fight inflation would be to expand the daily yuan trading
band to allow the yuan to appreciate properly." One interpretation of this development is that China, anticipating a delay of the Treasury report widely expected to brand China a currency manipulator, will placate the US just marginally and split the baby in the middle, by allowing a trading band expansion. Of course, this will do nothing to actually revalue the Yuan, devalue the dollar and boost US exports, but it will allow the Obama administration to save face and say "look, China made a concession" which the teleprompter will explain is an indication that the Obama administration now has the upper hand in Sino-US negotiations, followed by a round of applause from yet more to be soon unemployed people.

 
Tyler Durden's picture

Jim O'Neill Mea Culpa: "Hey I Was Dead Wrong On The Whole Yuan Thing, But... Hey Look Over There, Stocks Are Up"





Permabull Jim O'Neill of Goldman Sachs surprises everyone by issuing yet another missive after being dead wrong on the Renminbi a month ago, and very vocally so. The surprise is not in his persistent frothiness (the man is a singularly male version of an undoubtedly female A. Joseph Cohen after all), or his attempt at mea culpa'ing (we wonder what sport instrument Roach would recommend using on Mr. O'Neill), but that Jim is still at Goldman after the entire Red Devils fiasco. Oh, and speaking of sport, O'Neill joins the Krugman-Schumer team in providing most unwelcome policy advice to China.

 
Tyler Durden's picture

US-China Re-Retaliation - The Escalation: Senate To Unveil Bill Threatening Stiff Chinese Penalties If No Yuan Revaluation





Just a headline from Reuters for now:

U.S. SENATE BILL TO BE UNVEILED TUESDAY THREATENS STIFF PENALTIES ON CHINA IF IT DOES NOT REVALUE ITS CURRENCY-CONGRESSIONAL AIDES

We are confident China gets Reuters too.

 
asiablues's picture

Chinese Yuan v The U.S. Dollar: In The Case of Global Reserve Currency





The dollar’s status as the world's preferred reserve currency has come into question amid a ballooning budget deficit that keeps the U.S. dependent on foreign financing. It is now a matter of "when" rather than "if" the Chinese yuan will replace the U.S. dollar as the global reserve currency.

 
Chris Pavese's picture

Me Still Love You Yuan Time





China recently raised the Reserve Requirement Ratio by 50 bps to 16.5% for its domestic banks. This is the second hike in the past month and certainly not the last as China’s economy is still sprinting ahead. While equity markets have begun to price in the risk of “global exit strategies,” currency markets have yet to consider the implications of continued strong underlying growth in China. It is likely that additional Chinese monetary tightening will be accompanied by pressure to revalue the yuan.

 
madhedgefundtrader's picture

The Chinese Yuan is Begging for a Home Run





How the Middle Kingdom Became the World’s Largest Exporter. Is it possible that Obama’s stimulus program is reviving China’s economy more than our own? A free floating Yuan today would be at least 50% higher than it is today.
(CYB)

 
Bruce Krasting's picture

Goldman on the Yuan - What Do They Know?





When big shots at Goldman start talking I listen. I was surprised at what they said today

 
Tyler Durden's picture

Guest Post: Is The Yen A Proxy For Yuan (rmb) Devaluation Or Carry Trade Déjà Vu?





I have been bullish on the Japanese currency since March 2007. What I think defines broad movement in currencies is perception along with broad relative monetary actions. The expansion or contraction of monetary aggregates in one currency versus another is in essence its purest denominator. We show today such a timing model in the yen/usd rate of exchange. Notice that timing simply based on monetary aggregates can be not forgiving for quite some time until the new trend establishes itself.

 
Tyler Durden's picture

Albert Edwards Calls For The Next Black Swan: Expect Yuan Devaluation Following Deep 2010 Downturn





With everyone and their grandmother screeching that it is about time for China to inflate the renminbi, despite that such an action would be economic and social suicide for the world's most populous country, SocGen's Albert Edwards once again stalks out the Black Swan in left field and posits the contrarian view de jour: China will aggressively devalue the yuan following a deep 2010 downturn coupled with escalating trade wars. As Edwards says: "I think the next 18 months will see major ructions in the financial markets. The consequences of a double-dip back into recession next year require some lateral thinking. If the carry trade unwind results in a turbo-charged dollar, any collapse in the China economic bubble will be doubly destructive to commodity prices. A surging dollar, coupled with China moving into sustained trade deficit through 2010, could prompt the Chinese authorities to acquiesce to US pressure for a more flexible exchange rate. But why does no-one expect a yuan devaluation?"

 
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