China Suspends Foreign Banks' FX Trading As Offshore Yuan Spread Signals Massive Outflows

Tyler Durden's picture




 

For the first time since the August collapse, Offshore Yuan is trading over 1000 pips weaker (relative to the USDollar) than onshore Yuan, signalling outflows are once again escalating. Following the chaos in HIBOR money-markets, Offshore Yuan has crashed to 6.5970 (below August spike lows) to the weakest since Dec 2010. On the heels of this recent divergence between on- and off-shore Yuan, China has suspended some foreign banks from FX trading, we suppose to try and stem the capital outflows.

 

Offshore Yuan has crashed to 5-year lows against the USDollar...

 

And blown over 1000pips weaker than onshore Yuan...

 

Sending signals that outflows are starting to accelerate since The IMF gave China permission to devalue its currency....

 

Perhaps that is why Reuters reports that:

China's central bank has temporarily suspended some foreign exchange businesses of several foreign banks until the end of March, three sources with direct knowledge of the development told Reuters on Wednesday.

 

Included among the suspended services was liquidation of spot positions for clients and some other services related to cross-border, onshore and offshore businesses, the sources said.

 

The People's Bank of China (PBOC) sent a notice to the impacted foreign banks on Monday, the sources said.

 

The sources, speaking on the condition that the banks not be named, said they had seen the relevant directive.

 

The PBOC, when contacted by Reuters, had no immediate comment.

 

The move might have the effect of helping stabilize the yuan's exchange rate and cushion capital outflows due to the Chinese currency's recent depreciation.

Time for a significant crackdown on the supposedly free-floating currency of The IMF's choice or another significant devaluation is coming soon.

To put it another way - China just unveiled 'open' capital controls... and the last time they did that Bitcoin soared.

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Tue, 12/29/2015 - 23:52 | 6976842 NoDebt
NoDebt's picture

If this doesn't signal China taking over the world economically, I don't know what does.

"Remember Japan, Luke.  Remember your failure in Japan."

 

Wed, 12/30/2015 - 00:05 | 6976879 Money Counterfeiter
Money Counterfeiter's picture

Do some more ctrl prt

Wed, 12/30/2015 - 00:17 | 6976922 GhostOfDiogenes
GhostOfDiogenes's picture

Uh, no offense...but this shows how unstable the currency is, which at this stage is in a basket of IMF currencies, and is very much overvalued and could never ever become the us dollar, used or pegged in over 70 countries....

Do you even read articles before post?

Wed, 12/30/2015 - 00:31 | 6976962 joego1
joego1's picture

They are all becoming unstable cowboy. He did say the toilet bowl looks full in the dark didn't he?

Wed, 12/30/2015 - 00:42 | 6976984 GhostOfDiogenes
GhostOfDiogenes's picture

Russia and China continues to lose in the currency war.

What most morons who post here on zerohedge don't know, is that both countries are going through considerable internal problems, no matter how much RT spins it and China, says nothing.

The US still has great wealth, greater wealth than china or russia have.

If someone (an adult) wanted to teach a course in cognitive dissonance, they could come here and read posts by people.

I used to get mad at stupid. Now I just laugh at it. Sure people think I am crazy.

Well fuck 'em.

And that response was to "nodebt"

Wed, 12/30/2015 - 00:56 | 6977023 Duc888
Duc888's picture

 

 

"The US still has great wealth, greater wealth than china or russia have."

Define "wealth" please.

Pay no attnetion to the fact that we're drowning in debt.

Wed, 12/30/2015 - 01:00 | 6977038 Solarman
Solarman's picture

What happens if we simply declare it void?  We still have farmland, oil, metals, infrastructure, peaceful neighbors, etc.etc. etc.   

Wed, 12/30/2015 - 01:12 | 6977057 scintillator9
scintillator9's picture

Does Mexico count as a peaceful neighbor?

Does having metals, oil, timber, water, and farmland count when the EPA or various other agencies can strangle exploration and production with regulations as they please?

 

 

Wed, 12/30/2015 - 01:56 | 6977145 GhostOfDiogenes
GhostOfDiogenes's picture

"
Does having metals, oil, timber, water, and farmland count when the EPA or various other agencies can strangle exploration and production with regulations as they please?
"

The resident oil industry shill just arrived.

What time is it in tel aviv again schlomo?

Wed, 12/30/2015 - 06:11 | 6977437 Bmanyoman
Bmanyoman's picture

You think rich people give a shit about politics or their country? They are usually the first rats to abandon the sinking ship. Historically speaking that is. 

Wed, 12/30/2015 - 08:32 | 6977554 Nexus789
Nexus789's picture

So does Russia and China and given its size, Russia probably has a whole lot more.

Wed, 12/30/2015 - 08:41 | 6977583 Nexus789
Nexus789's picture

 

US wealth would diminish as asset values in the US are determined by the value of the Dollar. Declaring all debts void would immediately remove faith in the US as a fait currency which would devalue massively as holders of dollars sought secure places to park value – gold, silver, etc. This would make all imports much more expensive and diminish the value of assets in the US. Interest rates would probably rise as higher rates would be needed to try and attract investors to what has become a more risky investment (US debt).  In any event it would probably be a clusterf—k. 

Wed, 12/30/2015 - 01:39 | 6977110 GhostOfDiogenes
GhostOfDiogenes's picture

Wealth.

Most millionares and billionares.

http://www.alternet.org/economy/consequences-american-greed

Rich people=wealth.

Derp.

Wed, 12/30/2015 - 00:58 | 6977027 Solarman
Solarman's picture

Could not have said it better myself.  This is where the Russian and Chinese social media troll journeymen learn their craft.

Wed, 12/30/2015 - 01:42 | 6977117 GhostOfDiogenes
GhostOfDiogenes's picture

Can you read?

Are you able to find someone who can read for you?

Good.

http://www.thefiscaltimes.com/2015/08/18/Putin-s-Economy-May-Be-Even-Wor...

Good boy now run along and play with the other children.

Wed, 12/30/2015 - 01:01 | 6977039 I AM SULLY
I AM SULLY's picture

You are an idiot.

You accept the neocon/MSM narrative in whole, but you use the word "moron".

(good luck with your weath in America or anywhere else)

(there are no safe havens - USA included) 

Wed, 12/30/2015 - 01:28 | 6977085 GhostOfDiogenes
GhostOfDiogenes's picture

I bet you would blow putin if he let you.

Wed, 12/30/2015 - 01:57 | 6977147 I AM SULLY
I AM SULLY's picture

Actually - no.

But given that my dad fought the fascists in WW2? - you can go fuck some neocon-fascist cock.

Wed, 12/30/2015 - 02:11 | 6977173 GhostOfDiogenes
GhostOfDiogenes's picture

Well its obvious you are a moron.

Got it from daddy, when he fought for the federal reserve against the German people....

So that makes your daddy a commie.

No wonder you worship putin.

PS I piss on your father

Wed, 12/30/2015 - 08:38 | 6977593 Nexus789
Nexus789's picture

What a plank.

Wed, 12/30/2015 - 10:42 | 6977953 Dethrone The Ba...
Dethrone The Banksters's picture

lmao you're not 'edgy' or even original, just a bum, and I don't even disagree with all of what you say in your posts, but yea, you're a dickhead with no friends in real life I'm sure lmao 

Wed, 12/30/2015 - 01:33 | 6977087 jcdenton
jcdenton's picture

Really genius ,. And why is that?

Because of this?

http://www.veteranstoday.com/2014/07/30/the-coming-return-of-the-real-us...

Just what background in geopolitical open-source intelligence and security clearance (former or present) do you possess?

Cognitive dissonance? That especially applies to you et al American exceptionalists ..

(And I'm a white [German extraction], male, straight, single, Christian, unemployed, 55+, computer guy, USMC vet)

Wed, 12/30/2015 - 01:37 | 6977105 GhostOfDiogenes
GhostOfDiogenes's picture

Lol you like linked a known disinfo site and call me names!

Hahahahahaha!

Yes. You suffer from cognitive dissonance. Most on zh do.

Its chic to be a know-it-all-know-nothing on zh.

Wed, 12/30/2015 - 01:44 | 6977120 blue51
blue51's picture

^^ I think NoDebt was being sarcastic as well.

Wed, 12/30/2015 - 00:35 | 6976974 Money Counterfeiter
Money Counterfeiter's picture

Just print more money.  Paul Krugman said it was all good.

Wed, 12/30/2015 - 00:56 | 6977022 Solarman
Solarman's picture

I think he is being sarcastic.  Japan was going to take over the world too, at one point in time.

Wed, 12/30/2015 - 01:35 | 6977101 GhostOfDiogenes
GhostOfDiogenes's picture

Well that makes no sense.

Japan has the most stable asian currency.

Always has. Japan is not China.

They were never going to "take over the world".

Laughable.

Wed, 12/30/2015 - 00:02 | 6976850 Yen Cross
Yen Cross's picture

  No biggie. It's to scare investors for onshore/off shore arbitration.

 When it's dark, the toilet bowl looks full.

 What ever happened to that puny Ukie?

 The home arrested, people killer, that wanted to charge extra?

Wed, 12/30/2015 - 00:06 | 6976884 ebworthen
ebworthen's picture

So more binary database 1' and 0's flying about?

Isn't that the problem?  No tangible value?

Wed, 12/30/2015 - 00:17 | 6976923 Yen Cross
Yen Cross's picture

  I wish these kids would learn how to BUILD.

 They also need to learn the Arts, for creativity. [hands on]

Wed, 12/30/2015 - 00:08 | 6976888 yogibear
yogibear's picture

With all this control someone will take a hit.

The big money moves ahead of these announcements.

Follow the money.

Wed, 12/30/2015 - 00:09 | 6976896 Soul Glow
Soul Glow's picture

It's ok.  Everything is awesome.  Just ask the Fed.

Wed, 12/30/2015 - 00:20 | 6976934 Yen Cross
Yen Cross's picture

  Who would suggest" There's ONLY One way UP".

 Good on ya, Soul Glow.

Wed, 12/30/2015 - 00:14 | 6976912 Omega_Man
Omega_Man's picture

time for china to count its gold pieces and issue gold bonds and say a big fuck you to the west

Wed, 12/30/2015 - 00:29 | 6976951 Yen Cross
Yen Cross's picture

  Happy Trades 

 

Wed, 12/30/2015 - 00:37 | 6976980 Dazman
Dazman's picture

Nothing more will ensure capital flight (long term) than capital flight restrictions. Irony.

Wed, 12/30/2015 - 00:41 | 6976989 GhostOfDiogenes
GhostOfDiogenes's picture

This isn't "capital flight".

Its "flying capital".

Flying out before it all collapses, like paper tiger.

Wed, 12/30/2015 - 00:58 | 6977031 I AM SULLY
I AM SULLY's picture

I love it.

Every other day there is an article or a commenter spouting their "safe haven" theory ...

THERE ARE NO SAFE HAVENS!

CHINA IS SCREWED!

THE USA IS SCREWED!

THE PSYCHOPATHS AND SOCIOPATHS ENGINEERING THIS ARE SCREWED AS WELL - perhaps they know and don't care, perhaps they don't know.

But we are all screwed.

There is no safe haven.

(only rational choices in the face of difficulty)

(brace for impact)

Wed, 12/30/2015 - 02:00 | 6977152 FoundInTranslation
FoundInTranslation's picture

No. Gold, guns and bitcoin are all very much safe havens.

Wed, 12/30/2015 - 03:53 | 6977293 I AM SULLY
I AM SULLY's picture

Gold, guns - I agree (as long as it's not paper-gold/ETF).

As far as bitcoin? - I'm a computer scientist, and understand encryption, ergo I've considered bitcoin to be much less exciting than many.

(frankly - if I'm given a choice of selling first aid equipment to someone with: a) bitcoin, b) silver, c) gold, d) food ???

(I'd never do [a], and certainly would do [d,c,b] in that order)

(because, you know, FOOD ...)

Wed, 12/30/2015 - 05:36 | 6977401 old naughty
old naughty's picture

good choice(s).

Wed, 12/30/2015 - 01:27 | 6977081 Dolus
Dolus's picture

Slowly building confidence in the world's reserve currency.

Wed, 12/30/2015 - 02:15 | 6977177 Yen Cross
Yen Cross's picture

 I've outgrown FightClub.

  I love, and deeply appreciate the Tylers.

  I was foolish to think excellence was free?

 After 5+ years, I'll stay on the sidelines.

Wed, 12/30/2015 - 11:50 | 6978213 ThroxxOfVron
ThroxxOfVron's picture

It could never be excellence as it is, steeped in angst and cyicism, gilded with greed and seasoned with revenge lust...

 

Wed, 12/30/2015 - 09:08 | 6977648 Iam_Silverman
Iam_Silverman's picture

OK, am I the only one having trouble making sense of those charts?

Where they purport to show a widening margin between the (relative) value of Offshore Yuan versus Onshore Yuan, yet the colored lines are both labeled as "Offshore Yuan".  I can see the spread between the two lines, and I can pretty much guess which one is which by the inferred "value", but, am I missing something?

I am not an economist, and I did not spend the night at a Holiday Inn Express (or the Whitehouse) last night.

 

My next question is:  are the values shown in CNY/USD?  If so, are they taking into account the effects of comparing one dynamic currency to another?  It would make sense for the offshore rate to differ from the onshore (pegged) rate, wouldn't it?

Wed, 12/30/2015 - 23:16 | 6980665 hedgiex
hedgiex's picture

PBOC is not that asinine. They must have seen that the force of implosion from piling bad debts is escalating. This is a desperate (no choice) effort to implement in substance "exchange controls". Global markets will capitalise on this diminishing credibility. Into 2016 with great domestic volatilities and illiquidities to exploit. Now is the time to watch for yet further defenses to prevent insolvencies and does not preclude dumping of its foreign reserves. 

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