Some Chinese Banks Run Out Of Physical Dollars As PBOC Holds Yuan Fix Flat For 4th Day
Having apparently taken the day off from selling US Treasuries and buying Offshore Yuan (following yesterday's "murderous" short-squeeze"), completing a 40 handle round trip in the "stable" currency year-to-date, PBOC decided to hold Yuan flat for the 4th day but make a statement that they would "give policy support to exports" - in other words devalue more. The unintended consequence of their decision to withdraw liquidity and crush shorts in offshore Yuan is more problematic as it has reportedly left Chinese banks short of dollars at their ATMs (and are delaying withdrawals). Meanwhile, another of China's favorite outlets for capital outflows - Bitcoin - just got stomped.
"Stability" - apart from in money-markets and offshore Yuan...
As Offshore Yuan roundtrips 40 handles...
So a free-floating curreny as blessed by The IMF will only be allowed to move as The PBOC decides (as opposed to those nasty carry trade speculators):
- *YUAN EXCHANGE RATE SHOULD BE DETERMINED BY ONSHORE MKT: DAILY
- *PBOC NEEDS TO LEAD FOREX MARKET EXPECTATION: DAILY COMMENTARY
- *CHINA SHOULD CONTROL YUAN SUPPLY IN OFFSHORE MARKET: INFO DAILY
But then this...
- *CHINA LIKELY TO GIVE POLICY SUPPORT TO EXPORTS THIS YR: DAILY
Which rougly translated means - pile on into shorts and we are going to devalue until exports pick up.
Of course the whole world is waiting for China trade data tonight.
However, it seems someone just stomped on Bitcoin - one of the Chinese favored outlets for capital flows - to show tthat the 'transitory' capital controls can't be worked around
On heavy volume.
By way of a reminder, this is what was said last night...
A jump in the overnight cost for borrowing yuan in Hong Kong is "reflecting further PBOC efforts to stamp out speculation," according to Michael Every, head of financial markets research at Rabobank Group. Hong Kong-based Every told Bloomberg in an interview, following a massive spike in overnight borrowing rates for Offshore Yuan that "a 66% rate is murderous for others being swept up in this who are not speculating."
PBOC advisor Han earlier warned that short selling the yuan "will not succeed," adding that "it is pure imagination that the Chinese yuan will act like a wild horse without any rein." But as Every notes, the unintended consequences could be a problem, "imagine you needed access to CNH for other purposes for a few days," concluding ominously that "in other EM crises we see that central banks usually win a round like this, but lose in the end."
Sure enough: *SOME BANKS IN BEIJING, SHANGHAI RUN SHORT OF DOLLAR BILLS: 21ST
Some banks in China’s Beijing, Shanghai and Shenzhen ran short of dollar bills for cash withdrawal amid increasing demand for the currency, 21st Century Business Herald reports, citing reporter’s investigation.
BOC, CCB, China Merchants Bank in these cities require appointment at least 2 days in advance for >$5,000 purchases; appointment could take as long as 1 week at some branches.
So in their haste to withhold liquidity and spank the spceculators, The PBOC may have just started their very own domestic bank run...
Coming just 2 days after lines began to form at currency exchanges (as Chinese want Dollars for their Yuan),
As Ming Pao, the most influential Chinese newspaper in Hong Kong, reports that Shanghai residents are lining up at local banks to sell Yuan for Dollars over fears of even more Yuan devaluation.
We are sure Ms. Lagarde is produly standing by her decision to allow this "free" currency to be part of the SDR basket.
But then again - this is what "frozen liquidty" really looks like in China...
Charts: Bloomberg
(4 votes)
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Bitcoin - just got stomped.
Wait, wut?
Unpossible! ;-)
If bitcoin is important enough to the PBOC that they feel the need to intervene in its market... yea, I'm going to go full bit-tard and call that bullish.
Just like gold, I see it as a long term, 'slightly' more risky stash..
Physical assets are much less risky than paper or electronic assets
Only fools think BitCoin is independent of government intervention or confiscation or tracking.
for what it's worth, my friends on the ground in BJ confirm the same thing
been crazy the last week or so, how many people trying to get USD
one was nearly 100,000 USD at a diferent bank (bigger international bank)
all in small denominations haha took them almost half an hour to count by hand (always physically count in addition to machine counter for QA reasons)
When the locals are desperately looking to the pathetic US Dollar as a safe store of value, you know you're fucked.
in most of the bigger anecdotes I hear, it's likely not about finding a safe store of value per se....
it's because they were planning to buy US 'something' anyhow and now they're just trying to convert the FX now at a more favourable rate than perhaps later this year.
some of that's housing but it also include tourism, education, shopping... they're just planning ahead.
(edit) by the way, I've been hearing the 'FX rules' are being pushed really more by the government, not the banks. I'm not really super familiar about just how much PBOC influence the banks that ZH mentioned are under, but my best friend was saying it's really not a push by the banks themselves (or at least international banks)... it's coming from the government (and I suppose being pushed on some chinese banks). so it's less 'chinese banks' are pushing it but the government is.
that's in addition to just the logistics of any bank simply running out of actual physical notes on a daily basis but I can't imagine that's very common... probably just a precaution.
or even an excuse the PBOC is using to slow FX transfers.
And now we enter the phase where US dollars are going into circulation. I wonder what will happen when billions of printed dollars that were sitting dormant start hitting the streets.
They're digital dollars, they ain't goin anywhere, they're locked in the ether on a digital pallet. Even they are not stupid enough to unleash 18 trillion greenbacks, I think ;-)
I see your point and you may be right, but I think the Fed knows it has the cleanest dirty shirt and when the SHTF people want dollars. If people get them and spend them, inflation takes off. I also think that is why they raised rates and will do so again even with the bad consequences. They are in a box.
Bj ? does it mean blowjob?
i wish... my texts would be a lot more interesting then =(
"But then this...
Which rougly translated means - more Chinese-made plastic crap for your dollar, coming soon to a broke retailer near you."
Nearly free gas at the pump, nearly free crap Chinese products stocking the shelves as far as the eye can see, EBT cards overflowing with endless benefits... what's not to like? The US is ghetto fabulous.
The fact they can "intervene" (at multiple levels) whenever they want should be of a greater concern than your tolerance for "risk as a currency".
But hey, it's your "currency" so knock yourself out, buy low sell high as they say.
Catch the knife ;-)
Russia doesn't seem to like Bitcoin very much either:
http://www.coindesk.com/bill-bitcoin-ban-russian-legislature/
It's not rocket surgery ;-)
Thank you, I will. 50 quatloos on the bitcoin!
I think I understand how sketchy the whole thing seems to you - but give the currency and the network this much at least;
Just think of it as another abstract form of wealth... It does some things better than Au or paper script. It does others much more poorly. But it can transact value and works well as a medium of exchange for a sizable group internationally.
(And you can use it to buy gold internationally, almost instantly, and painlessly... as opposed to setting up wire transfers and waiting days for them to clear.) Just talking my book.
There's also lots of people like me with bid / ask ladders on a couple of exchanges actively trying to stabilize the price of Bitcoins. A key criticism is that it's too volatile. If a few more of you guys would join me, even with just 1% of your betting cash, we can hold the price with greater stability than half of the government fiat currencies out there. Yes, you can still keep your gold and silver coins.
I find the Bitcoin arguement a perfect correlation with the Gay pride movement.
Guys like you two are sincere and have valid working models to make your situations better and are not forcing your viewpont on anybody...
Others are batshit crazy and do no one any service.
Bitcoins drop is due to announcement of a somewhat risky hard fork (upgrade) that will double the number of transactions per second bitcoin can perform. Good news in my book and temporary provided hard fork encounters no problems.
Phonestar just moved his position into Litecoins.
sum ting wong?
Show me the money ..
just show me the money.
Handle this (insert pic of my balls)
Nassim Nicholas Taleb was asked whether public protests in Athens is a Black Swan Event.
He replied: “No. The real Black Swan Event is that people are not rioting against the banks in London and New York.”
When?
Never have truer words been spoken. Wait for it.
don't wait for it, the number people who understand the whole thing enough to riot are not enough to start one
the numbers are not there, and never will be
Think this may be a world epidemic, no dollars in the local ATM here in the UK!!!!
The end is high!!!!!!
The end is high? In colorado maybe.
This why futures are flying again?
Or was it the Fed audit bill that got killed today?
Oh, they DID kill it eh. BIG surprise.
I can't wait for the great and mighty Obama to come in teevee tonight to tell us about his great achievements and about how grand things are. I get down on my knees and give thanks every day that we have a mighty leader such as he.
If I didn't know you better I'd say that almost sounded sarcastic.
Dr. I wouldn't normally watch him but he was punked by the Iranians tonight so I might check in to see how the narcissist in chief starts out.
All hail the OBAMANATOR!
America does not need a Leader . Executive Orders my ass.
" Chinese ATMs run out of dollars"
I read several years ago that the Chinese counterfeit US dollars, and the US government lets them because they are as good as quality as the real ones, and the fed didn't have to pay to print them. I wondered about that when I read about the ATM machines giving out bucks. ...They'll just print more tonight.
He just going to use the whats left of the union speech to remind us how we're unworthy of his greatness
I often thought we don't deserve him.
Here are some signs of a coming recession.
1. Investors in high-yield bonds are expecting to see their first negative return since the start of the credit crisis in 2008.
http://www.marketwatch.com/story/deteriorating-junk-bonds-flash-warning-signs-for-stocks-2015-12-07?dist=afterbell
2. Factory orders continue to drop
http://www.zerohedge.com/news/2015-10-02/us-factory-orders-flash-recession-warning-drop-yoy-10th-month-row
3. Default risk spikes
http://www.zerohedge.com/news/2015-10-02/us-financials-default-risk-spikes-2-year-high
4. M&A set record
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/
5. Iron ore prices tumble
http://www.marketwatch.com/story/iron-ore-prices-keep-crashing-adding-to-global-growth-fears-2015-11-30
6. Baltic dry shipping index tumbles
http://www.marketwatch.com/story/shipping-index-falls-to-all-time-low-stoking-fears-about-global-growth-2015-11-19
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
A few years ago I read a piece by Jim Willie (whatever you think of him). He postulated that the then medium term prognosis for the US dollar was that it would go up an up and up and then 'just disappear'. So you look at the situation now, and there is no fundamental reason for the dollar being at the level it is at, let alone higher. So then you ask youself, is there a possibility that the US will go nuclear with the dollar and devalue it 30,40,50% overnight? Of course there is. If they did that, they would instantly cut the burden of their debt in half. And all the suckers who are flocking to US dollars for 'safety' will get the biggest tax bill in the history of mankind, with the possible exception of the last devaluation done by Roosevelt. The disappear part comes after when everybody and his brother will want OUT of the dollar because (a) the Fed can't be trusted (we know that now) and (b) they can't afford to just sit there and consume.
I think the dollar will die because of political crises sparked by economic crises. If they do a huge deval and go full-nirp, I think it'll likely soon after trigger a breaking point in the people... 'urban' fellows rioting ala Ferguson/Baltimore on a huge scale across the nation. Lefties marching on the street. Rght-wing rebellions similar to Oregon but in places that actually matter and, again, on a greater scale. The crackdown after that will be brutal and spark 'something'. People around the world won't even have faith that The US will last as a nation by this point.
Just my take.
So the Fed will assert it's independence immediately after Trump is elected?
Bitcoin recovered half the loss already. The buying power at the daily 50MA is just crazy strong in China.
The Party is probably screaming "you dumb fucks why do you think we we've been promoting the purchase of gold, Jesus fucking Christ the American dollar are you kidding me"
LOL no feel on their own domestic consumer and saver and yet spinning that they can command obesisance for global traders. Yes we respect the humongous reserves and the money press. Fire these bazookas please.
How do you say "George Soros" in Mandarin? Somebody out there is going to figure a way to take the People's Thieves Den of China to the cleaners.
China is selling dollars to devaluate Yuan or dump them?
I hate not knowing anything
they sell fx reserves (ie USD) to maintain their peg