Yuan Dumps, Bitcoin Jumps As China Researchers Suggest "One-Off Devaluation" & Capital Controls

Tyler Durden's picture

As we have detailed numerous times recently, the recent move in Bitcoin has been strongly suggesting increasing fears of capital controls and/or expectations of a looming (and quite notable) devaluation of the Yuan against the US Dollar. Tonight saw China's largest nationalist tabloid suggesting that China should consider one-off yuan devaluation to keep the currency stable at equilibrium level. Offshore Yuan is tumbling - to new record lows.

As we noted earlier, a quick look at the uncanny correlation between the decline in the Yuan and the rise in the bitcoin, confirms that the digital currency has indeed been largely used to evade capital controls. 

Based on this chart alone, the recent surge in Bitcoin would imply that a substantial devaluation of the yuan is looming. That, or even more aggressive capital controls.

And tonight, researchers with State Information Center led by Zhu Baoliang wrote in an article published on Shanghai Securities News, that China should consider one-off yuan devaluation to keep the currency stable at equilibrium level and suggest capital controls and as well as what seems like a reference to "virtual currency"...

...the effect of monetary policy continues to weaken. After repeatedly cut interest rates, lowering after registration, our short futures money market interest rates have dropped to about 2.2%, in the history of a relatively low level. Money supply growth rate far exceeds the rate of economic growth, social capital is abundant. But because of the lack of investment opportunities, more funds through the state-owned enterprises and financing platform to invest in less efficient infrastructure, or real estate, or idle in the virtual economy. Capital continues to off real to the virtual, will breed all kinds of asset bubbles, a huge impact on financial stability. At the same time, state-owned enterprises, financing platforms, real estate and other sectors and industries a large number of financing, but also pushed up the financing costs of financial markets, private enterprises and small and medium-sized enterprises to reduce the financing cost is not large, thus out of private investment.

 

...

 

It is suggested that the total social financing and broad money growth should be about 12%, and maintain a reasonable and reasonable liquidity scale. The second is to further improve the RMB exchange rate market-oriented level, and enhance the flexibility of the RMB exchange rate, or even a one-time devaluation of the renminbi, so as to maintain the stability of the RMB in the equilibrium level.

 

At the same time, the proper control of foreign exchange outflow, the state-owned enterprises in overseas real estate, antiques, teams and other non-substantive, non-technical M & A activities to be strictly limited. Third, closely tracking study American influence elected president's economic policies on China, the foreign exchange market volatility and prevent cross-border capital outflows triggered massive financial risk domestic bond market, the real estate market.

And for now the reaction is offshore Yuan selling to record lows...

 

And Bitcoin (in China) surging very close to record highs...

 

7,588 Yuan per Bitcoin in the record high and volume in this most recent surge is dramatically higher. But as we noted earlier, for those buying into bitcoin here on the momentum, most of which originates in China, we urge readers to be cautious as by now the PBOC has certainly noticed that the digital currency remains one of the final, and most successful, means of bypassing capital controls in China. Should Beijing mandate that bitcoin no longer be a means to illegally transfer capital offshore, there is risk of a dramatic, and sharp, drop in its price.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
FuckJanetYellen's picture

Those gooks are gonna pull it soon.

gatorengineer's picture

Telegraphing a one off devaluation is a great way to stem capital outflows.... 

kliguy38's picture

pure genius......so there is another agenda.....

Draybin Deffercon III's picture
Draybin Deffercon III (not verified) kliguy38 Jan 2, 2017 10:39 PM

OMG! Moar Bitcoin! My Satoshi homo-boner just wrecked the new pants I got for Christmas!

https://localbitcoins.com

2_legs_bahhhhhd's picture

From your link, the buy price is 120$ more than the sell price. The spread on gold coins is about half that. Is everyone paying that kind of spread on BC?

Draybin Deffercon III's picture
Draybin Deffercon III (not verified) 2_legs_bahhhhhd Jan 2, 2017 11:16 PM

I will admit that is a drawback about localbitcoins.com. You get a tighter spread at the exchanges.

Mustafa Kemal's picture

DD3, I had wondered how you had adjusted to the $1K BTC.

Draybin Deffercon III's picture
Draybin Deffercon III (not verified) Mustafa Kemal Jan 3, 2017 12:19 AM

Price in USD is the least interesting thing about Bitcoin.

Dark Daze's picture
Dark Daze (not verified) FuckJanetYellen Jan 2, 2017 10:32 PM

Never understood the penchant for americans to keep seeking out another beating.

kochevnik's picture

Must be related to celebrating endless victories over the 50 wars they lost

jmack's picture

eh, monero's rise is more interesting than bitcoins...

BabaLooey's picture

The need for punching up headlines....

"Yuan Dumps, Bitcoin Jumps As China Researchers Suggest "One-Off Devaluation" & Capital Controls"

weak ......HERE'S some click bait....

"Bitcoin Pops, Yuan Poops, As Bejing Blowhards Bellow Basement Drop & The Mao Monetary Mombo"

Draybin Deffercon III's picture
Draybin Deffercon III (not verified) jmack Jan 2, 2017 10:46 PM

Do not be deceived by false altcoins. Stick to teh light of Satoshi.

kochevnik's picture

Their software is too slow for my aged computer.  Cannot load the blockchain

silverer's picture

Bitcoin races up because they don't have a mechanism to staunch its rise like they do with silver and gold. And yes, it's risky. Remains to be seen what Beijing will do.

Draybin Deffercon III's picture
Draybin Deffercon III (not verified) silverer Jan 2, 2017 10:40 PM

There is nothing risky about Bitcoin at all and I recommend people put at least 80% of their wealth into Bitcoin to maximize returns.

2_legs_bahhhhhd's picture

80%? Why not just go all in. What could go possibly go wrong.

messystateofaffairs's picture

They can buy btc slowly and accumulate it to dump when it spikes but that mechanism only slows it down some.

whatamaroon's picture

Trump just tweeted about China and their massive theft, wonder if this has any effect on the Juan?

 

China has been taking out massive amounts of money & wealth from the U.S. in totally one-sided trade, but won't help with North Korea. Nice!

Shed Boy's picture

Trump needs to learn a little history. Maybe then he will understand why China doesn't care about North Korea. This side of the planet isn't playing the "fear/propaganda card" when it comes to N Korea.

gatorengineer's picture

I think Trump understand that no Korea is just a useful Chinese province.  If you think otherwise you are a fool.

Dark Daze's picture
Dark Daze (not verified) Jan 2, 2017 9:24 PM

I hope they fucking devalue and do a good job of it. It will, of course, cause panic on Wall Street and bring us that much closer to the end of this Kabuki theather for the greenback.

gatorengineer's picture

Devauling is a rally cap for wallstreet.

Not Devaluing is a rally cap for wallstreet.

Everyone knows that Stawks can only go up...

 

Dark Daze's picture
Dark Daze (not verified) gatorengineer Jan 2, 2017 10:04 PM

Yeah, just until the payment comes due and you have no gold. Then what? How are you going to supply 250 million people in the cities? If China pays in gold it will want to be paid in gold (or silver to an extent). 

hotrod's picture

Go ahead, Devalue, everyone else has.  Except the exceptional USA.  It will certainly spruce up our current account.

Dark Daze's picture
Dark Daze (not verified) Jan 2, 2017 10:25 PM

Here's the scenario, dimwits:

1. THe more pressure put on China with a rising US dollar creates more instability. The more instability the more people will rush to gold. The higher gold goes the closer China gets to backing it's Yuan reserves WITH gold and the closer the US dollar gets to oblivion.

2. China still has 3.2 Trillion of US dollar reserves to play with, while you have, a bunch of slimy Wall Street paper pushers who only have futures contracts and a gold market that is leveraged 500 to 1 to play with. Who do you think is going to win?

3. As the Yuan devalues, the property, plant and business value of any US owned venture that deals in/is valued in Yuan are getting slaughtered.

If you think for one minute that China just fell into this enviable position, you haven't been paying attention. This has been planned very, very well.

Now, all you China bashers, look and see, your crooks have been fucked by the best in the business. And it serves you fucking right.

Yen Cross's picture

   Geesh Tyler , did you pull an article written in Mandarin and use Google Translate to repost it in Chinglish?

 

 

 

In OMOS for the day, the Bank to:
  • inject  20bn yuan via 7-day reverse repos
  • inject  20bn yuan via 14-day reverse repos
The 40bn injection will be a net drain (after OMOs rolling off are taken into account) of 155bn yuan. overnight yuan rates in HK will likely head higher on this.        That didn't work out so well...
Dark Daze's picture
Dark Daze (not verified) FinTechNerd Jan 2, 2017 10:24 PM

and gold is on it's way.

SgtShaftoe's picture

Annnd.. Hugh Hendry just shit himself.

Dark Daze's picture
Dark Daze (not verified) Jan 2, 2017 10:44 PM

I wonder how long it will be until the major gold producers go on strike against the theft that the Fed is imposing on them?

Yen Cross's picture

  The faggot know- nothing spammers are getting really old.

  Just like every other month for the last eight fucking years, the sell side jacks up the $usd to sweep the the order board, in front of shity NFP numbers.

  I can't believe the idiocy I'm seeing in the currency markets right now.  Some people are going to get SQUEEZED!

Draybin Deffercon III's picture
Draybin Deffercon III (not verified) Yen Cross Jan 2, 2017 11:03 PM

"The faggot know- nothing spammers are getting really old."

I was wondering if it was just too much turkey or if we were beginning to wear you down?

Soul Glow's picture

As I root for bitcoin to skyrocket I smile at the fact that I can still buy an ounce of silver for under $20.  I mean think of it this way - you bought bitcoin 5 years ago for $30 per....per bitcoin.  Well  you made a lot of money, just as if you had bough amazon back then, or tesla.  But me, I have been buying under $20 an ounce before it went to $45, and I've been buying it since it dipped back.  So I mean I'm all in favor of bitcoin, but I don't feel like buying it right now.  This is why I'm not buying equities.  It had it's run up.

Also just to put it in pers[pective I'm not going to be buying silver at $1k/oz.  Not going to happen.  I'll be selling it then.  Just as if I had bought bitcoin 5 years ago I'd be selling it now.

hedgiex's picture

Best for them to devalue and go ballistic with capital controls. Less long term carnages than battling with global markets. 

DaBears's picture

I'm suprised The party hasn't closed this obvious loophole months ago, my guess is there are heavy connected players in this bubble somewhere.