One Week Later: China's Currency War Leads To Global FX Carnage

Tyler Durden's picture

One of the big problems with China's FX move is that although they've "only" seen a 3% currency fall (in the onshore Yuan) since their announcement last week, as Deutsche's Jim Reid explains... others have subsequently followed suit either deliberately or via market pressure. Emerging Market FX has been falling for 9 straight weeks but the last 2 have seen a dramatic escalation in the carnage...

The following countries have seen their currency depreciate at least 4% since last Monday (and using last night’s closing prices):

Kazakhstan (leading the way with a huge 26% devaluation following the removal of the trading band), Russia, Ghana, Guinea, Colombia, Belarus, Turkey, Malaysia and Algeria.

In fact, if we extended the analysis to include those that have seen at least a 3% depreciation then the number of countries hits 17 and unsurprisingly all sit in the EM bracket.

Every day it feels like we’re hitting fresh cycle lows for a currency somewhere with yesterday’s highlights being the Turkish Lira briefly sliding past 3 against the Dollar for the first time ever, the South African Rand breaching a level not seen since 2001, the Ruble weakening to the lowest level since February and the Malaysian Ringgit returning to a 17-year low.

So whatever their intentions the Chinese have created an air of fragility around the globe.

Source: Deutsche Bank

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silver_stacker's picture

It's only a matter of time before king dollar gets knocked off its perch...

Serfs Up's picture

The dollar is the roach motel of currencies...

Everyone will scurry for safety and then.... aaaaaaand, it's gone!

knukles's picture

Never forget: Emerging market currencies are endemically weak; of the canaries in coal mines

MalteseFalcon's picture

Big picture. Bottom line. If China won't buy, it's over. CBs and PPTs can't stop it.

Bernoulli's picture

If China is serious (and they actually have 10'000 tonnes of gold), it's game over.

MaxMax's picture

Since last Monday, gold has appreciated 5% againt the USD.  If you add another 5% decline, it gives you a better picture.

KnuckleDragger-X's picture

When the world economy is already wobbly, a little nudge is all it takes and this one will be hard to stop once the herd starts stampeding......

readyforit's picture

Great news if you wanted to holiday in any of these shitholes...

tarabel's picture



Hey, isn't Veneuela "emerging" any longer? Do they have an additional band of currencies for hopeless shitholes even beyond these entrants? 

Mr... Robot's picture

Money worth nothin and your chicks for free.

coast's picture

I need 3 to 4 weeks more to complete my off grid set up.....hang in there cb's just a few more weeks

Chuck Knoblauch's picture

The IMF's power is an illusion.

medium giraffe's picture

It's all an illusion, a giant universal wrong turn.  Fuck 'em, they can keep it.

KnuckleDragger-X's picture

Yep, but some people still believe the world is flat......

Chuck Knoblauch's picture

China will collapse the US economy if the IMF doesn't respect its currency.

It's getting personal now.

Tzanchan's picture

I'm shocked, shocked to see that nobody has yet blamed the Trilateral Commission, Jews, Israel or any of the usual suspects for this.