PBOC Hits Panic Button: Strengthens Currency By Most In 20 Months

Tyler Durden's picture

On the heels of growing contagion concerns regarding shadow banking collateral and the "rehypothecation evaporation" and this weekend's 'odd' Chinese trade data (big drop in imports, no doubt impacted by dramatic commodity invoicing swings), the PBOC has fixed the Chinese currency 0.36% in the last 2 days... the biggest strengthening in the currency since October 2012. It is unclear for now exactly what is going on but we suspect the panic button outflows as banks pull credit and unwind CCFDs are forcing China's hand to offset CNY selling pressure... and of course China does it in grand style.


China's biggest trade surplus since Jan 09... as imports tumbled 1.6% (against expectations of a 6% rise)


After weeks of weakening and comments on rising volatility and flexibity to tamp down the carry trade fervor, China has gone to the other extreme...


Whether this is to kill off the last of the momentum-chasing muppers now following the CNY weakenin trend is unclear but one thing is certain, the coincidence of such a violent move with the rising credit contagion concerns in the warehouse probes is extremely interesting.


Barclays provides some more color:

Barclays expects depreciating CNY and recent govt probe into commodity financing to continue to discourage commodity imports for arbitrage purposes, according to note yesterday; despite sizable trade surplus and FDI, PBOC’s FX purchase slowed markedly in recent mos., suggesting reduced capital inflows from other channels and signs of capital outflows

First we are told this...


Which likely means that is exactly what they are worried about... and then Premier Li is starting to worry...


And then there's this...


So - not good then!?

And then copper crashes to Friday's lows...

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max2205's picture

It's all Chinese to me

InjectTheVenom's picture



DoChenRollingBearing's picture

We are still in Peru, and are hearing from people that maybe China is partly resposible for the current slowdown (including for our bearing business).

The Yuan going up does not help us, it MIGHT help the USA re the trade balance, but this appears an ugly thing to me...

thisisjustarandomusernameicreatedforzerohedge's picture

they did the exact same thing 2 months ago and it was called anti-currency speculation on this very website

but now it's panic? LOL


and let's be clear, PBOC would prefer a weaker currency to further boost exports and manufacturing right now and to further limit capital outflows


the notion that they are going to STRENGTHEN the currency to people have even less of a reason to put Chinese factories to work, and to give all the corrupt elite even MORE reason to transfer their capital out of the country to Vancouver SanFran London Sydney is hilarious


hell if anything i wouldn't be surprised if the politburo was behind the copper warehousing drama because NOTHING like this happens in china without at least one facet of the party signing off

RafterManFMJ's picture

OT Via King World News:

"He (Papandreou) was very thoughtful about this. He said to me, “Yes, beyond austerity, beyond reforms, there had been deep conversations about how to change the monetary order.” I asked, “Did this include a gold standard?” What he told me was, “It was about exploring a basket of currencies that could involve an asset like that (gold).”

I asked, “Are you referring to an SDR (Special Drawing Right)?” And he said, “Yes. It would be along those lines.” He wasn’t trying to hide anything. He was very candid about it. But it was a very interesting exchange. It’s not often that you have these conversations.” To hear Ben Davies continue his discussion about the astonishing comments made by former Greek Prime Minister George Papandreou, be sure to listen the KWN audio has now been released and you can listen to it by CLICKING HERE."

The Shootist's picture

Wake me when people start seeing gold and silver runs at the coin shop.

DoChenRollingBearing's picture

Don`t be near the end of THOSE lines!

new game's picture

i dont get in lines...

give it up on the gold thingy.

buy something that has usefull value, like a tool!

ps. gold is for fools ie fools gold...

stay off lakes unless swimming or fishing.

BrosephStiglitz's picture

Fools gold is iron pyrite.  It is a different mineral deposit that looks (vaguely) like gold.

Gold and silver can, and will remain a means of wealth preservation.  I agree that capital investment is likely to be much more useful.

Wild Theories's picture

Wat happen to Sum Ting Wong? 

Ting on holiday for Tung naw?

Vampyroteuthis infernalis's picture

It is just a matter of time before this hits foreign markets. Too late, game is over!!

Bernanke'sDaddy's picture

Mar Jin Car!



Yu Pai Now!


Yen Cross's picture

 Yum, Yum ...



   It looks ugly, even after PBOC paint's the PIG.

TeamDepends's picture

If the Chinee are panicking, it means they are in control completely, as in "nothing to see here", and/or "move on, douschebag, nothing to see here"....

Yen Cross's picture

  Forgot the sarc</> tag

TeamDepends's picture

*We did not junk yio ou ouch.  Our attorneys will contact your                       stop the madness

Yen Cross's picture

 Your comment was 3-rd world discheveled?  


  " General council "is the appropriate term. I pay hourly, just like you?




Bro of the Sorrowful Figure's picture

aint no one panicking. chineeze sheeplez have no idea. people at the top, as we have witnessed in the US, can do whatever they fuck they want and as long as the sheeplez dont understand or notice or panic everything will remain A-Ok. print a few trillion? no one cares. QE infinity? awesome. slow back and forth, everything strategic, manipulation in every market is old news.

JJdog's picture

So does that mean buy stock tomorrow? At this point, I don't even distingush what is good news or bad news, long as there is news, we shoudl buy stocks right? 

Hindenburg...Oh Man's picture

you got it buddy...any news is reason to buy socks. It's your patriotic duty, in fact, to lead with purchases of NFLX and AAPL. If you have any money left over after that, but some TSLA. If there is actually no good or bad news, then that's good news since it could always be worse(i.e. a meteor could have hit us, so it didn't--bullish!). bottom line: buy stocks, and if themarket opens in the red or pulls back .10 percent, buy more, or in other words, BTFD. IF it doesn't even pull back .05 percent, that's fine to--just BTFATH. 

Eyeroller's picture

There is no such thing as bad news.

OC Sure's picture

Actually, if you look at the chart again, is it a coincidence that the USDCNY strengthened as US Bond yields dropped over the last few months? Maybe the worlds largest holder of Treasuries says sell?

yrbmegr's picture

The only other time to buy stocks would be when there is not news.

asteroids's picture

Be careful here. Things are starting to break. One day, you might wake up to limit down.

KickIce's picture

Probably a done deal if not for Belgium.         Sarc/

Yen Cross's picture

 Anyways, I'm ploting the charts.

   Now I'm going to shipping and electricty usage charts . Granular charts> Retail>movement<demand>expendature


Kirk2NCC1701's picture

I never do chart porn on Sundays.

techstrategy's picture

I anticipated this earlier today when commenting on another post.  China will part with its $3T USD and $1T UST before flooding the market with physical gold people.  The rebalancing is coming as expected... when it became the only semi stable path...

indygo55's picture

So they bought all that gold for so much money and now in order to "rebalance" things they are going to dump it onto the market to reduce the price? And they will accept ,, what,, dollars, Yuan? And that makes it all ok? Sorry. Either you forgot the SARC tag or you need to be a little more clear on how this works for us little thinkers.


lasvegaspersona's picture


so China will part...with everything??

I understand getting rid of paper but physical gold???They have so little ( a few thousand tons tops) that selling it all would not cause more than a blip....the Forex markets move that much paper gold in an afternoon...

techstrategy's picture

I should have been more clear.  I was saying that China would part with USD and UST while keeping all the physical gold...  The hubris of the Fed and its TBTJ owners has undermined our productive capacity and real economy and greatly compromised our nation.

you enjoy myself's picture

so they're going to flood the market with physical as a result of finally discovering there's far more paper than physical, and after they've diligently been acquiring for years?  totally makes sense. 

i don't doubt the price of gold will take a short term hit if GLD IOU's flood the market.  but you'd be insane to not buy hand over fist when that happens.

Law97's picture

No big deal.  The Fed will just print up another few trillion and quietly move everything right on over to its own balance sheet. 

yrbmegr's picture

Russia has metal.  Maybe China could get some from them.

TheRideNeverEnds's picture

D...Does this mean I set up the DOW 17000 banner too early?  

WMM II's picture

"the coincidence of such a violent move with the rising credit contagion concerns in the warehouse probes is extremely interesting."


please keep us posted. a classic zh series.




AdvancingTime's picture

Much of the recent growth in China after 2008 came from a massive 6.6 trillion dollar stimulus program that expanded credit and poured massive amounts of money into the system. This money encouraged expansion and construction with little regard as to real demand or need. Like a plane on autopilot China continued in the direction it had been on.

Now China finds itself in a credit trap. For years the people of China have had the habit of saving much of what they earn but the low interest rates paid at banks has not rewarded savers. With few investment options much of this money has drifted towards housing and driven housing prices sky high. The economic efficiency of credit is beginning to collapse in China and the unwinding of China’s giant credit spree could be very painful. More in the article below.




Yen Cross's picture

   Regardless of the outcome. When we compile all of the axioms together, it's clearly obvious where resource production has moved.

 The United States has destroyed itself within. That's been the plan all along. Nuclear weapons are a deterent. People weapons, not so much.

  Obama isn't worth Impeaching. He'll die early in the 2030 civil war to reclaim this republic our fathers and forefathers fought for.

mvsjcl's picture

2030? But that seems like such a long time from now. Can't we hurry this up?

besnook's picture

fn brilliant! these guys couldn't wait. it reminds me of local tradition. any bananas growing on the side of the road somewhere where it is not clear if anyone takes care of the property(the loophole) are fair game. there are different uses for different bananas and different preferences for harvest time. depending upon location, there could be as many as 20-30 people watching a roadside bunch of bananas grow. it takes a relatively long time for a good bunch of bananas to approach harvest time so a lot of people can see it. everyone who sees the bunch of bananas knows there is a window of opportunity for the best time to pick. it isn't a sudden timing thing. it can be a three week window. every fn time some asshole pulls the trigger early and cuts the bunch down too early before perfect.


we are just a bunch of monkeys, aren't we?lol

oh yea....bullish

Yen Cross's picture

 Fukin A Besnook! You made me laugh first! We both "sarc'ed it up".

jonjon831983's picture

Maybe they should audit those warehouses GS bought 4 years ago.

"Goldman's new money machine: warehousesJul 29, 2011 



"U.S. Subpoenas Goldman in Inquiry of Aluminum WarehousesAugust 12, 2013



"Goldman Sachs Makes $255 Million Storing 3% of Global Aluminum Production 7/25/2013



Oh my: "Exclusive: Goldman puts Metro metals warehousing unit up for saleMay 20, 2014