China Isn't Exactly Floating The Yuan But...

Tyler Durden's picture

Earlier we speculated that the one thing that could throw this whole fiasco into a complete tailspin is for China to float the renminbi, which would catch an already frazzled America unawares, as China submits a formal bid for its currency to become the de facto global reserve. Well, that didn't quite happen. However, at a massive 0.23% change in the fixed overnight rate, a move that very much hurts China, it is about as symbolic of an intraday change as can be. The PBoC set the Monday USDCNY fixing at a record high of 6.4305, up from 6.4451. While it is unknown whether this near record rate of FX change will be sustained, China just sent a very clear message to the US, following the previously noted opeds in both Xinhua and FT, in which various Chinese individuals blasted the current situation America finds itself in. The only question now is whether China will proceed with a very demonstrative dump of US bonds tomorrow to reinforce the purely political statement it just made in FX.

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Newsboy's picture

It is happening.

the Reset.

Bretton Woods-3.

Quixotic_Not's picture are you the famous Newsboy from Ticker forums?

Newsboy's picture

No, I don't look there. Sorry if I took a used moniker.

Quixotic_Not's picture

It's AOK...just checking  ;-)

I abandoned it, it's all yours....

Yen Cross's picture

I apologize for interupting you.  SAN's the idea!

HoofHearted's picture

China will dump US Treasuries, but it will be right before the market so as to exacerbate the problems for the US mkts. They will try to get into gold and silver, coal, oil, anything at all that they can get.

DosZap's picture

Hoof, @ 22:13

That will be a VERY expensive DUMP.

Both monetarily, and Politically.

This will not go well with the African Queen.

westboundnup's picture

If China decides to wreck the US economy, it will likely do so . . . right before its own economy is ruined. 

TruthInSunshine's picture

Floating their currency plays right into the hands of those in the U.S. Government who've been pressuring China to let their currency appreciate for a long, long time now.

There's a reason why China hasn't done so, and why they will not.

China is voicing displeasure along with Russia and many others, but they would implode much of their exporters and destroy a good chunk of what makes China desirable from a multinational's perspective if they floated their currency.


tmosley's picture

Reverse psychology is hilariously effective, isn't it?

TruthInSunshine's picture


But was it Confucious who said "[h]e who laughs last, laughs hardest"?


I don't think it was, but China is 'brainstorming' their options.

It's going to be interesting to see how this plays out. I doubt that much of the developed world trusts China to do anything but that which is in their self interest, and I know all of Asia, and especially Japan and South Korea certainly feel this way, but then again, no one's exactly smitten with the U.S. given the way The Bernank is torching the global fields.

57-71's picture

Interesting comment.

With respect to financial holdings, could you name any countries that act in any manner other than self interest?

TruthInSunshine's picture

I was referring more to political self interest.

China is probably the only nation that is viewed with more alarm and fear in terms of aspirations to expand its economic might for the nationalistic goal of expanding its military might and expanding its territory and territorial claims than any other nation on earth, including the very empirial acting United States as of late.

This is particularly true in Asia.

Hell, even Russia would love to eliminate China in some form or another, and vice versa.

All's fair in love and war.

DeadFred's picture

True, but why do you think that would deter them. Just because you wouldn't do it if you were in their shoes doesn't mean they won't. This is THE time to make a power play. Their economy is turning south anyway, domestic unrest is rising, and the long-nosed barbarians are teetering on the ropes. The cultural descendants of the long march are aren't worried about a little chaos. They sent a million to die in the Korean War to force a stand-off and considered it a victory. Agreed the current leaders are a lot softer than Mao but the were nutured in the same mind-set. Don't assume they think as we do. If they believe dumping treasuries will make China #1 in 15 years they will do it in a heartbeat and let the quarterly reports be damned.

FreedomGuy's picture

You forget the other side of the deal, though. A strong yuan which becomes the world reserve makes all commodities cheaper for China. They are in a voracious acquisition phase of all strategic commodities from oil to rare metals. By fixing a low rate with the U.S. we export our inflation to them. This would stop and rebound to America. They could even buy large parts of businesses and resources like farmland here in the U.S. at a big discount. They have many allies like Russia.

I also don't think they are ready just yet. It would be an early move. They have very small gold reserves compared to their currency. We have huge gold reserves compared to anyone else...ok, at least on paper. It's like having the most nuclear missiles in a showdown. That's our ace in the hole, last resort, nuclear currency option. China is buying all their own domestic production at about 300 tons a year, but it would take over 10 years to even partially back their currency.

The other advantage they have, even though perhaps not ready for prime time is that we have the biggest bunch of economic idiots and know nothings in the White House, Congress and treasury in history. It would be a sort of economic sneak attack if they got aggressive.

Let's see what they do, but it is clear what they mean to do in the future. They mean to be the number one superpower, economic badass in the world. I actually kind of respect that. Game on.

narnia's picture

china really exacerbated (especially food) commodity markets when they were actively investing their balance of trade in building up war time inventories in 2009-2010. they have pretty much moved back into buying government debt- EU (through Eurodollar) & US. 

they understand if they dump, it goes directly to the Fed.  that's a terrible trade, even in spite.

Ahmeexnal's picture

Wait for a mega false flag to unfold as the markets open.

Quixotic_Not's picture

Yeppers, gonna be a lot of agent provocateurism at play, not the least of which will be HFTs, Sale of non-existant stocks (naked shorts sold), Bloomturd/CNBC lying out there asses, politeers and banksters engaging in insider trading while misleading the investing public, again.

I'll wait a couple of weeks before the true dominoes start CRASHING to ca$h out my T-Bill/Brokerage accts. and convert EVERYTHING into PMs.

I never thought I'd be forced to go 100% Ag/Au in my portfolio, but nothing else makes sense right now!  It's the he who panics first panics best scenario all over again! 8-)

There's nothing, and mean NOTHING in 'MeriKa that isn't over-valued by at least 50% right now...

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Yes, a cyber attack supposedly from China would be perfect for the demons!



Mike2756's picture

Not China, plenty of malcontents out there. Pak for one, the shootdown was payback for the osama raid.

delacroix's picture

we know it wasn't osama, that got killed, so who was it?

Quixotic_Not's picture

I just love the smell of currency manipulation in the morning!

When you see that in order to produce, you need to obtain permission from men who produce nothing; when you see that money is flowing to those who deal not in goods, but in favors; when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you... you may know that your society is doomed. ~ Atlas Shrugged

¿Tienes plata gringo?

jdrose1985's picture

Chuck the finese!

gwar5's picture

I tried to see about getting some YUAN last year. Near impossible unless you go to China.

Panama maybe, PBOC branches there, but haven't made it yet. CAN, AUS still good ones.

PMs still the kings.

toady's picture

I was gonna say...

I think they have offices in NY&SF now.

I'm getting sooooo slow in my old age!

Yen Cross's picture

  BUT what? Ghost Cities?  Funny how this  THREAD/ Surfaces before the ASS CLOWN speaks!?

Divine Wind's picture

The Chinese will not pass up this opportunity.

Mike2756's picture

Will the Fed be forced to defend the dollar at some point? Maybe there won't be qe3?

tjfxh's picture

The US wants to see the USD fall another 10-20% to gain export advantage. They'll roll out Tim to jawbone about a strong dollar, as usual, and that will be it.

Quixotic_Not's picture

The US wants to see the USD fall another 10-20% to gain export advantage.

If that happens, they'll lose control and there'll be a sell-off that takes it down 50-60%...

How do you think that'll work-out for the Ivy League Mob? ;-)

Mike2756's picture

That was my thought, at what point do they lose control?

WonderDawg's picture

They're hanging by their teeth right now.

I was wondering about the global PPT. A rolling PPT effort, across the market time zones? Can they pull it off? Hang Seng down 3.4% right now. I'm thinking not.

Mike2756's picture

Back to stagnation then.

PaperBugsBurn's picture



Neither will the Russians. The petrodollar doomed the Soviet Union but now they are the world's biggest energy exporter.


Payback is a biatc!

Snidley Whipsnae's picture

No crisis should go to waste!

I used to laugh to myself when multitudes of US MSM azz hats made comments about how unsophisticated the Chinese economy was... Now I'm laughing out loud.

China has had ~5,000 years of experience with various monetary experiments (mostly fiat). And we are going to teach them how to manipulate a currency/credit crisis to an advantage? LOL

If you are still holding paper... good luck to you.


Cognitive Dissonance's picture

The FX equivalent of kicking sand in the (USA) bully's face.

tjfxh's picture

And just where is China going to sell its stuff if it doesn't want to accumulate USD?

Snidley Whipsnae's picture

Jim Rickards said China is posting some US Treas Paper to US financial institutions for purchase of long PM positions on commodities exchanges... listen to Rickards at link below... China is also using US Paper to purchase and stockpile all commodities and have been for several years...

"Who really controls the gold" KWN Jim Rickards...

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

"This is not the end.  It is not even the beginning of the end, but it is the end of the beginning."

--Sir Winston Churchill

War is next!


FreedomGuy's picture

No shooting wars with China. They won't win. Economic war, probably. The admirals of our economic navy are from Gilligan's Island. All morons.

Arch Duke Ferdinand's picture

China's Industrial Espionage Techniques

""China will stop at nothing to "assimilate and absorb" technology. China used those exact words in a lengthy document on procuring technology....""

OT: 2 min hilarious video...

treemagnet's picture

They'll try and they'll fail.  No appreciable amout of foreign reserves is gonna flow into that rabbit hole.  The Fed is terrible, but those Chinese fucks don't even keep records to manipulate.

cranky-old-geezer's picture

God what a bigoted moron.

China doen't have to attract foreign reseves.  They're getting the shit in boatloads already selling their manufactured stuff to everybody on the freikin planet.

Yes they'll eventually float their currency.  Or maybe not. 

Either way it's going to become the defacto world reserve currency, if not dejure.

America is finished.  We're in that slow steady slide down from superpower status.

China, the ANA more specifically, is the rising new superpower.

But bigots can't see reality.  Refuse to see reality more like.