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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...

  • *CHINA CASH CRUNCH IN JUNE LAST YR UNLIKELY TO REPEAT: LIAN PING
  • *CHINA'S OVERSUPPLY OF PROPERTY MAY LAST FOR 1 YEAR: LIAN PING

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

  • *PREMIER LI SAYS DOWNWARD ECONOMIC PRESSURE RELATIVELY LARGE
  • *LI URGES GOVT TO RESOLVE PROBLEMS OF FINANCING, EXPORTS
  • *LI KEQIANG URGES GOVTS TO ENSURE CHINA TO MEET ECONOMIC GOALS
  • *LI KEQIANG SAYS HE WORRIES ABOUT IMPLEMENTATION OF POLICIES

And then there's this...

  • *CHINA MAY LAND SALES FALL 49% TO 62.2M SQUARE METERS: SOUFUN

So - not good then!?

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

 

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Sun, 06/08/2014 - 21:58 | 4835730 InjectTheVenom
InjectTheVenom's picture

Ho Li Fuk !

Sun, 06/08/2014 - 22:03 | 4835746 kliguy38
kliguy38's picture

Sum Tung Wong

Sun, 06/08/2014 - 22:05 | 4835761 max2205
max2205's picture

It's all Chinese to me

Sun, 06/08/2014 - 22:29 | 4835829 InjectTheVenom
InjectTheVenom's picture

zerohedge/missusa/game2/zerohedge/missusa/game2/zerohedge/missusa/game2/

 

Sun, 06/08/2014 - 22:44 | 4835881 I MISS KUDLOW
I MISS KUDLOW's picture

panic button bitchez

Sun, 06/08/2014 - 22:52 | 4835903 sixsigma cygnus...
sixsigma cygnusatratus's picture

 

Mon, 06/09/2014 - 00:38 | 4836160 DoChenRollingBearing
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...

Mon, 06/09/2014 - 06:51 | 4836431 thisisjustarand...
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

Mon, 06/09/2014 - 03:35 | 4836314 RafterManFMJ
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."

Sun, 06/08/2014 - 22:22 | 4835809 The Shootist
The Shootist's picture

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

Mon, 06/09/2014 - 00:39 | 4836163 DoChenRollingBearing
DoChenRollingBearing's picture

Don`t be near the end of THOSE lines!

Mon, 06/09/2014 - 05:24 | 4836373 new game
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.

Mon, 06/09/2014 - 05:31 | 4836381 BrosephStiglitz
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.

Mon, 06/09/2014 - 00:25 | 4836130 Wild Theories
Wild Theories's picture

Wat happen to Sum Ting Wong? 

Ting on holiday for Tung naw?

Sun, 06/08/2014 - 22:04 | 4835749 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

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

Mon, 06/09/2014 - 08:55 | 4836614 Bernanke'sDaddy
Bernanke'sDaddy's picture

Mar Jin Car!

 

 

Yu Pai Now!

 

Sun, 06/08/2014 - 22:02 | 4835731 Yen Cross
Yen Cross's picture

 Yum, Yum ...

 http://www.shibor.org/shibor/web/html/index_e.html

 

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

Mon, 06/09/2014 - 00:25 | 4836129 ThroxxOfVron
ThroxxOfVron's picture

"WHO put the dip in the dip de dip de dip?"

http://www.youtube.com/watch?v=lXmsLe8t_gg&feature=kp

Mon, 06/09/2014 - 01:39 | 4836229 Yen Cross
Yen Cross's picture

 @ ThroxxOfVron    Thanks for the link.

Sun, 06/08/2014 - 21:59 | 4835735 TeamDepends
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"....

Sun, 06/08/2014 - 22:04 | 4835753 Yen Cross
Yen Cross's picture

  Forgot the sarc</> tag

Sun, 06/08/2014 - 22:20 | 4835805 TeamDepends
TeamDepends's picture

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

Sun, 06/08/2014 - 22:32 | 4835830 Yen Cross
Yen Cross's picture

 Your comment was 3-rd world discheveled?  

 

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

 

 

 

Mon, 06/09/2014 - 05:19 | 4836369 Bro of the Sorr...
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.

Sun, 06/08/2014 - 22:07 | 4835768 JJdog
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? 

Sun, 06/08/2014 - 22:16 | 4835783 Hindenburg...Oh Man
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. 

Sun, 06/08/2014 - 22:36 | 4835854 Eyeroller
Eyeroller's picture

There is no such thing as bad news.

Sun, 06/08/2014 - 22:37 | 4835858 OC Sure
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?

Sun, 06/08/2014 - 23:14 | 4835967 yrbmegr
yrbmegr's picture

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

Sun, 06/08/2014 - 22:19 | 4835803 Tasty Sandwich
Sun, 06/08/2014 - 22:24 | 4835816 asteroids
asteroids's picture

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

Mon, 06/09/2014 - 09:27 | 4836723 KickIce
KickIce's picture

Probably a done deal if not for Belgium.         Sarc/

Sun, 06/08/2014 - 22:36 | 4835851 Yen Cross
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

 

Sun, 06/08/2014 - 22:51 | 4835897 Kirk2NCC1701
Kirk2NCC1701's picture

I never do chart porn on Sundays.

Sun, 06/08/2014 - 23:00 | 4835935 techstrategy
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...

Sun, 06/08/2014 - 23:26 | 4835996 indygo55
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.

 

Sun, 06/08/2014 - 23:31 | 4836007 lasvegaspersona
lasvegaspersona's picture

tech

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...

Mon, 06/09/2014 - 11:01 | 4837058 techstrategy
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.

Mon, 06/09/2014 - 00:05 | 4836073 you enjoy myself
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.

Mon, 06/09/2014 - 00:07 | 4836077 Law97
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. 

Sun, 06/08/2014 - 23:14 | 4835966 yrbmegr
yrbmegr's picture

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

Sun, 06/08/2014 - 23:32 | 4836012 TheRideNeverEnds
TheRideNeverEnds's picture

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

Sun, 06/08/2014 - 23:33 | 4836016 WMM II
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.

ty.

 

:)

Sun, 06/08/2014 - 23:37 | 4836022 Glass Seagull
Glass Seagull's picture

 

 

Wei Tu Hai

Mon, 06/09/2014 - 00:19 | 4836115 AdvancingTime
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.

http://brucewilds.blogspot.com/2014/03/china-and-great-credit-trap.html

 

 

Mon, 06/09/2014 - 00:29 | 4836141 Yen Cross
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.

Mon, 06/09/2014 - 07:14 | 4836451 mvsjcl
mvsjcl's picture

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

Mon, 06/09/2014 - 00:50 | 4836154 besnook
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

Mon, 06/09/2014 - 01:44 | 4836231 Yen Cross
Yen Cross's picture

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

Mon, 06/09/2014 - 00:56 | 4836186 jonjon831983
jonjon831983's picture

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

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

http://www.reuters.com/article/2011/07/29/us-lme-warehousing-idUSTRE76R3...

 

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

http://www.nytimes.com/2013/08/13/business/us-subpoenas-goldman-in-inqui...

 

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

http://www.forbes.com/sites/robertlenzner/2013/07/25/goldman-sachs-makes...

 

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

http://www.reuters.com/article/2014/05/20/us-goldman-metals-sale-idUSBRE...

Mon, 06/09/2014 - 01:45 | 4836232 Wild Theories
Wild Theories's picture

On one hand, you gotta admit it's a tough balancing act for the levers man in a reserve bank(PBoC).

Too much capital inflow? burn that FX carry trade. Burn it, burn it, now take an axe to it.

Possible captial outflow panic coming? stem it, stem it, now easy, easy does it.

 

On the other hand, damn it's good to have the actual ammunition to do everything you want. There's the value of having a trade surplus with massive foreign reserves working right there.

Mon, 06/09/2014 - 02:12 | 4836256 Yen Cross
Yen Cross's picture

    It makes sense for China to strengthen the Yuan, and I think the Obama administration hastened it.

 

Mon, 06/09/2014 - 02:27 | 4836273 q99x2
q99x2's picture

They have nothing to worry about. The IMF is preparing to relocate its headquarters there.

Mon, 06/09/2014 - 05:10 | 4836363 orangegeek
orangegeek's picture

This obvious sign of stability for China should help lock in that natgas trade deal with Russia.

 

Russia must surely want the juan now more than ever.

 

Communists - same mentality, same outcome.

Mon, 06/09/2014 - 05:23 | 4836372 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Oh come now, the chart shows CNY has just hit a little upside resistance.

It's all good.

Ha.

Mon, 06/09/2014 - 06:52 | 4836434 Last of the Mid...
Last of the Middle Class's picture

Lets see, they built cities no one lives in based on the credit given for mountains of copper no one can find and the housing markets on the east and west coast are booming as they get the hell out while our economic geniuses say the recovery in housing is here finally. What could possible go wrong?

Mon, 06/09/2014 - 10:53 | 4837032 Incubus
Incubus's picture

It's a game of Chicken, and we know everyone's a bitch.

 

extend and pretend.

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