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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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."


Money Counterfeiter's picture
Money Counterfeiter (not verified) NoDebt Dec 29, 2015 11:05 PM

Do some more ctrl prt

GhostOfDiogenes's picture
GhostOfDiogenes (not verified) NoDebt Dec 29, 2015 11:17 PM

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?

joego1's picture

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

GhostOfDiogenes's picture
GhostOfDiogenes (not verified) joego1 Dec 29, 2015 11:42 PM

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"

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.

Solarman's picture

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

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?



GhostOfDiogenes's picture
GhostOfDiogenes (not verified) scintillator9 Dec 30, 2015 12:56 AM

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?

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. 

Nexus789's picture

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

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. 

GhostOfDiogenes's picture
GhostOfDiogenes (not verified) Duc888 Dec 30, 2015 12:39 AM


Most millionares and billionares.

Rich people=wealth.


Solarman's picture

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

GhostOfDiogenes's picture
GhostOfDiogenes (not verified) Solarman Dec 30, 2015 12:42 AM

Can you read?

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


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

I AM SULLY's picture
I AM SULLY (not verified) GhostOfDiogenes Dec 30, 2015 12:01 AM

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) 

GhostOfDiogenes's picture
GhostOfDiogenes (not verified) I AM SULLY Dec 30, 2015 12:28 AM

I bet you would blow putin if he let you.

I AM SULLY's picture
I AM SULLY (not verified) GhostOfDiogenes Dec 30, 2015 12:57 AM

Actually - no.

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

GhostOfDiogenes's picture
GhostOfDiogenes (not verified) I AM SULLY Dec 30, 2015 1:11 AM

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

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 

jcdenton's picture

Really genius ,. And why is that?

Because of this?

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)

GhostOfDiogenes's picture
GhostOfDiogenes (not verified) jcdenton Dec 30, 2015 12:37 AM

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


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

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

blue51's picture

^^ I think NoDebt was being sarcastic as well.

Money Counterfeiter's picture
Money Counterfeiter (not verified) GhostOfDiogenes Dec 29, 2015 11:35 PM

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

Solarman's picture

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

GhostOfDiogenes's picture
GhostOfDiogenes (not verified) Solarman Dec 30, 2015 12:35 AM

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".


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?

ebworthen's picture

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

Isn't that the problem?  No tangible value?

Yen Cross's picture

  I wish these kids would learn how to BUILD.

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

yogibear's picture

With all this control someone will take a hit.

The big money moves ahead of these announcements.

Follow the money.

Soul Glow's picture

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

Yen Cross's picture

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

 Good on ya, Soul Glow.

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

Dazman's picture

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

GhostOfDiogenes's picture
GhostOfDiogenes (not verified) Dazman Dec 29, 2015 11:41 PM

This isn't "capital flight".

Its "flying capital".

Flying out before it all collapses, like paper tiger.

I AM SULLY's picture
I AM SULLY (not verified) Dec 29, 2015 11:58 PM

I love it.

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




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)

FoundInTranslation's picture

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

I AM SULLY's picture
I AM SULLY (not verified) FoundInTranslation Dec 30, 2015 2:53 AM

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 ...)

Dolus's picture

Slowly building confidence in the world's reserve currency.

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.

ThroxxOfVron's picture

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


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?

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.