Chinese Stocks Drop 3rd Day In A Row On Margin Crackdown As Yuan Tumbles To Record Discount Versus Fix

Chinese stocks are trading lower again (on margin crackdowns) - the first 3-day drop in 3 weeks - back into the red year-to-date. Despite weakening the fix this evening, the 'market price' for USDCNY is trading at a record 1.93% discount to the official rate - inching ever closer to the 2% peg limit. At 6.2522, the market is just 40 pips away from forcing policy makes to intervene (selling the USD and and buying Yuan) - which realistically is perhaps a positive for the Chinese to unload some USD reserves. This move comes as China’s currency overtook Canada’s dollar to rank fifth for global payments last month with a record market share of 2.17% and HSBC this evening forecast the Yuan will overtake the Japanese Yen as Asia's most-used Global FX in Q2.

Chinese stocks are lower for the 3rd day in a row... and negative year-to-date again (note the last 2 days saw afternoon session bounces... but yesterday failed)

On the heels of more margin crackdowns...

• *CSRC TO CHECK 46 COS.' MARGIN FINANCE BUSINESSES: XINHUA

It appears the regulators are serious about taming the wild beast of speculative frenzy that created this...

The upper USDCNY (lower CNY) band is getting tested as the market appears to be forcing policy-maker's hands to raise the fix (weaken the Yuan fix)...

The yuan touched 6.2569 on Jan. 26, the weakest level since June.

All started after The SNB action...

As Yuan overtakes CAD to become the 5th most used cuirrency in global trade

and HSCB sees JPY being overtaken soon...

HSBC expects rapid uptake of international payments in yuan to continue this year and beyond, according to Vina Cheung, global head of RMB internationalization for payments and cash management.

“Following 102% growth in 2014, we anticipate the RMB will overtake the JPY as Asia’s top global currency in Q2 2015,” Cheung says in statement

*  *  *

De-dollarization continues...

Comments

[JungleCat]

But China is decoupled!!
Or has that word been taken out of Investopedia?

[Divided States ...]

The only thing that has truly decoupled is reality and fantasy.

[angel_of_joy]

The US stocks are falling too... must be a trend.

[noben]

You mean ALL currencies are decoupling from the USD.

I see almost all currencies being 15-50% down. It means they can't buy US stuff -- as if they'd want it anyway, but Imports must be up, since their stuff is cheaper. E.g. have you looked at the specials on foreign vodka?

[TeamDepends]

Yellen-san es no bueno, ouija????!...

[Soul Glow]

All fiat will die.

[LetThemEatRand]

Different Fiat, but still applicable:  "Have you seen the latest Fiat anti-theft device?  They enlarged the logo."

[rlouis]

The YOY reversal between the Euro and US$ is pretty impressive.  If a 12 month change like that can occur, it can reverse or go to even greater extremes. Or the CNY can leapfrog the whole stack.

Let's leverage it up with winning bets assured by the CBs of the western world. 

[RagnarDanneskjold]

7 cities in China are up buying empty houses to reduce inventory and to use as resettlement for bulldozed shantytowns.  7 Provinces Launch Govt Homebuying Schemes

[Pheonyte]

Wasn't the complaint against China that they're keeping their currency artifically weak?

[Goldilocks]

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[noben]

Note that the RUBle has fallen, however. Significantly.