Yuan Is Crashing (Again)

Tyler Durden's picture

The volatility in the Chinese currency has gone from the sublime to the ridiculous. After exploding 21 handles stronger in the biggest PBOC-engineered short-squeeze in history - erasing the entire post-election sell-off - offshore Yuan is now collapsing once again, down 350 pips tonight (and over 10 big figures from Thursday's highs). While interbank rates have calmed down, the rush to exit the currency has not...

The last two days are the biggest drop in offshore Yuan since Aug 2015's devaluation... as PBOC weakens its fix by the most sine June 2016.

 

Pushing historical volatility to its highest since the Aug 2015 devaluation...

For some context, this level of volatility is over 10 standard deviations away from the pre-Aug 2015 norms.

Notably the moves accelerate afterPBOC Advisor Fan Gang told Bloomberg TV...

  • *PBOC WANTS TO SEE FX RESERVES REDUCE SMOOTHLY, GRADUALLY: FAN
  • *CHINA POLICY MAKERS NOT LIKELY GO FURTHER ON OUTFLOW CURBS: FAN
  • *YUAN OVERVALUED IN PAST 3-4 YEARS AGAINST DOLLAR: FAN
  • *CHINA POLICY MAKERS NOT LIKELY TO DROP INTERVENTION: FAN
  • *USE OF YUAN HAS INCREASED DESPITE RECENT DEPRECIATION: FAN
  • *CHINA NEEDS LESS FX RESERVE AFTER YUAN'S INCLUSION IN SDR: FAN

Which was followed by the state-run Global Times newspaper says in an English-language editorial, saying that the Chinese people will demand its government to “take revenge” if Donald Trump reneges on the one-China policy after becoming U.S. President.

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wee-weed up's picture

What do nations do when their economy crashes? They go to war!

kiwigal's picture

I've said it before and say it again just watch and see what happens in the Sth China Sea, they are getting very friendly with the Philippines as well. We also have our pal in North Korea to consider, could be a very convenient tool for China to use. Underestimate the threat of China at our peril. 

Draybin Deffercon III's picture

LOL... all of you Chinese and Amerikans have unstable joke "currencies" that only fools accept and conduct business in.

https://localbitcoins.com

NoDecaf's picture

So does this mean between Trumps tariffs and the crashing yuan it'll be a wash for US consumers (and producers)?

Mustafa Kemal's picture

"So does this mean between Trumps tariffs and the crashing yuan it'll be a wash for US consumers (and producers)?"

A wash no, but is certainly could produce fireworks

Raffie's picture

link that talks about Bitcoin

http://kingworldnews.com/one-shock-after-another-will-create-the-biggest...

'

Bitcoin has benefitted from the current fear in financial markets and has risen 100% since January 2016. But it is a volatile market and in the last couple of days we have seen a 25% fall. It is likely that Bitcoin will continue to rise since many investors believe that this is the best way to avoid any currency restrictions, regulations, bank failures or confiscation. I do think that as a speculative investment Bitcoin could rise a lot further. But investors must remember that Bitcoin has nothing to do with wealth preservation. Bitcoin is an electronic currency not dissimilar from paper money. Bitcoin, like paper money, has zero intrinsic value. Also, there are a great many risks. As an example, Bitcoins can disappear without trace. And if something happens to the internet, such as a temporary shutdown or cyber-attacks, investors will have a problem accessing their Bitcoins. Having said that, I see the biggest problem being government regulations. 

If Bitcoin and other cyber currencies are too successful, governments will start regulating that market until it becomes just another paper currency.'

 

Draybin Deffercon III's picture

Wrong. Once you study and understand P2P networks and networking you will see how powerless governments are to stop it. Our ultimate gambit is that governments cannot shut down the Internet, and governments cannot force ISPs to police their users, and governments are too disorganized, self-centered and stupid to mount any meaningful resistance to the Bitcoin network.

Raffie's picture

Cool story bro.

You are total expert and these others are fake news right?

They know nothing?

Then WHY don't you tell them and square them away since the lieing about Bitcoin.

Ok...... enjoy yourself.

Draybin Deffercon III's picture

I wouldn't go to a plumber for a toothache.

I wouldn't go to kingworldnews.com for information on Bitcoin and technology.

paperstreetsoapco's picture

Underestimate you do, the power of the dark side. 

 

And there's this little matter of the NDAA, E.O. 12472, and the transfer of control of the internet to the U.N., My. Gox, etc., just to name a few.

 

Bitcoin is wearing a steak suit while swimming in the great barrier reef. 

YMMV

whatamaroon's picture

Thanks, I am definatly going to buy more Bitcoin.

Draybin Deffercon III's picture

Thank-you for choosing Draybin Deffercon.

Theosebes Goodfellow's picture

Draybin, in general I'm against suicide but in your case I'll make an exception.

I kno wthat we ZHers like on-the-ground field reports from countries that are relevant to the global economic picture. I've run across a couple of western young men who also happen to be collaborators on videos about how things really are in China. I have found their insights to be keen and discerning. They both have over 10 years in-country and are fluent in their local dialects.

The insights they share about modern Chinese culture is priceless. Sometimes funny, sometimes wry and wistful, they do not fail to educate and entertain. Here are some links:

You will NEVER be Chinese!

Why is Everything in CHINA FALLING APART?

GHOST CITY - Inside the Chinese Housing Bubble

China's Leftover Women

 China is my Favourite Restaurant!

serpentza (South African)

I particularly like this one:

 Why I REFUSE to buy Property in China

It is everything you need to know about what is wrong with China.

laowhy86   (American)
Are Chinese People Racist?  Growing Nationalism in China Both these guys have now married Chinese women. They share how thay reality is different from marrying a western woman. Enjoy!
Draybin Deffercon III's picture

i tRI3d sV1c!d3....

But I just came back as another shitty Bitcoin pumper on zerohedge.com!!

Raffie's picture

U MAD BRO?

If they wrong about Bitcoin then write your facts that are cross referenced and email ZH.

If good they would probably post it.

Just saying.....

Draybin Deffercon III's picture

I wonder how Bitcoin is $890 USD today?

I mean if all it did was "crash" shouldn't it be $0 by now?

Or perhaps, your sources of information are just total shit?

paperstreetsoapco's picture

I get it, your mom stopped buying caffeine, so your fighting off the D.T.'s in her basement again.

 

Relax dude, smoke some choom-gang special and chill the eff out bro.

SILVERGEDDON's picture

Well, from $1100.00 or so down to $200.00 once before, and same going on tight now real time, the M.O. seems to be well established for the pump and dump characteristics of digital Ponzi Clown Bux.

Seriously - how the fuck can anything that rollercoasters in value like a motherfucker be the foundation for currency exchange value ? 

swizzlefoot's picture

I have done this already. Tyler, it isn't random info, cause I'm the hero.

SILVERGEDDON's picture

Dragbin Shitcoin in 5................4..................3..............2....................1.............................

Fucktardius Maximus Erectomosa Dickhead. 

Raffie's picture

Throw more rice and tea at it.

fattail's picture

Strong countries dont have to implement capital controls and complain about speculators.  We are 18% of their imports.  They can't get in a trade war with us, not with 300 million peasants now middle class chinese who will all be sudden ly unempoloyed.  What is a all of those industrial fixed assets worth when their owners top line drops by 18% and actually probably more.  Nothing is the answer.  Are they going to send their one aircraft carrier over  to bomb san francisco?  No they aren't.  They probably can't let it leave the south china sea.

China is a debt laden country who's economic "prosperity" the last 20 years has been driven by a government mandated credit bubble and nothing more.  The domestics after shocks of that credit bubble are going to be enormous which is why they are trying to avoid them by distracting their countryment by picking fights with trump.

They are the US.  Without the 11 air craft carriers and reserve currency status.

xythras's picture

The japs should suffer.

That should be a lesson for making everything in China and ruining their economy.

The central planners's picture

Bitcoin trolls pumpers 3.. 2.. 1...

Draybin Deffercon III's picture

Yes, when you see an opportunity sit on your a$$ and listen to a bunch of grumpy, clueless old men instead.

sinbad2's picture

And by the way the US is moving tanks and nukes up to Russia's border, whilst pulling back its carriers, it could be pretty soon.

I have noticed that the US prefers to go to war in the spring.

stant's picture

Bit coin is your friend until its not bitchez

Draybin Deffercon III's picture

Bitcoin is a friend in need.
A friend indeed.
A friend who makes you feel better.

Raffie's picture

The big drop the other day in Bitcoin made many feel better.

It happens dude, like the stock market. UP and down and all around.

Draybin Deffercon III's picture

...in the case of Bitcoin that's a lot of up with very little down.

SILVERGEDDON's picture

" Would you, could you, would you be my neighbor ? "

Dragbin - no, and fuck no. Keep your digital clown bux, and try pimping something real, like mail order brides, or good weed - you got the sales ability, you just need a fucking product based in reality.  

NoDebt's picture

I told you to sell the rip.  This bitch is going nowhere but down.  When they interve, you step aside.  When the "shock and awe" is over, you plow back in.  Their reserves are vast, but their problems are infinite.

China is the greatest lie of the 21st century.  ALL.  OF.  IT.

 

 

D Nyle's picture

Don't forget India is the next best investment, They have been saying that for the last 500 years

Getafix's picture

"Tottering on the edge of a precipice" describes what India is today. Populated by ignorant folks drunk on delusions and hubris, a black hole containing 1/5th of all humans, sans any humanity, its mere existence makes one believe in miracles.

 

Dilluminati's picture

I told you to sell the rip.  This bitch is going nowhere but down. 

Their reserves are vast, but their problems are infinite.

(one caveat)

When you see the MSM talking about gloom and doom after a 15% or greater retracement "you plow back in."

Grab you profit and get out and watch carefully

You trade often your doing it "wrong."

OpenThePodBayDoorHAL's picture

Or what they say about Brazil: "it's the country of the future. And always will be"

NoDebt's picture

That is a WAY better comment than my own.  So true.

 

Antifaschistische's picture

My thoughts are very non-technical on this one.  For the past 30 years China has been making money, by watching money drain from the Western swamp.  But like all swamps, there is not an endless amount of wealth.

America is running out of wealth.  Many Chinese are foolish interpreting this as an opportunity to invest in....dollars!   Okay, go ahead...then we'll recycle our fiat for another couple of rounds until it all gets blown away.

whatamaroon's picture

Years ago Malcom Forbs took a Harley trip thru Africa and declared it would be the next best investment. Damn if that African investment didn't come here!

HRH Feant's picture

I love watching Bloomberg on Sunday afternoon. There is a big RBS conference in China. It looks like someone is trying to work out the kinks.

gregga777's picture

Click bait headline.  How anyone could justify piddly ass little squiggles in exchange rates as "crashing" is beyond me.  WTF is down "10 big figures" supposed to mean?  This whole article is hysterical click bait bullshit.

Yen Cross's picture

  BoJ is the new Belgium proxy.  Look at treasury futures,

  The good news is that it's getting harder to HIDE!

swizzlefoot's picture

a.k.a

open those BTC longs on okcoin now!

 

Draybin Deffercon III's picture

Blessed art thou of Satoshi Consciousness swizzlefoot!

swizzlefoot's picture

i'll give you my secret...follow okcoin's futures (even if you spot/market buys/sell) as an indicator. look which exchanges comproise the btc futures index and it'll make sense, only 20x  20% of you porfoilo, 30% should be low margin traded (2.5x~), and 50% offline cold storage.

Soul Glow's picture

Volatility is good right?  Isn't that what they teach in the textbooks?

Yen Cross's picture

 

  Tyler you're wrong on this one. This is BoJ driven. Look at the Shibor charts.

 Why would the PBoC be buying $usd if it's protecting yuan?  I understand, the fact that they want to devalue, but they don't want to destroy their yuans.

  I also call bullshit, that the Chinese have $3-Trillion on F/X reserves.

    Maybe COMBINED F/X reserves "priced" in $usd.  China's GDP has dropped over the last 3-4 years and their F/X reserves have risen by almost $1 Trillion?

 Do we have a swaps market with the PBoC that I don't know about?