PBOC Launches Day Two Of Currency Cold War Offensive

Tyler Durden's picture

The People's Bank of China set the yuan's central parity rate against the U.S. dollar at 6.3737 on Thursday, a second sequential major drop and down from Wednesday's 6.3598. This follows a weakened fixing of 6.3598 on Wednesday, down from the record high fixing of 6.3483 on Tuesday, just before the Senate decided to launch the first salvo in the Sino-US trade wars. Surely news of the collapse in Chinese exports will merely reinforce the theme that the USDCNY is in sudden need of devaluation and be a loud slap in the face of the Senate which will now come face to face with its utter worthlessness.  In Hong Kong, the offshore yuan spot rate was fixed at 6.4407 against the greenback on Thursday, compared with Wednesday's 6.4923. The fixing is based on an average of bids from 15 participating banks and is calculated by the Treasury Markets Association, a Hong Kong-based industry group. We are hardly the only ones who noticed the escalation in spot USDCNY wars by the PBOC, which now appears hell bent on showing the US its peg can go lower in addition to higher (inflationary consequences be damned) - from the WSJ: "The yuan fell sharply against the U.S. dollar in early Thursday trade, after the Chinese central bank surprised the market by guiding its currency weaker for the second consecutive day despite the dollar's global weakness." So even as the USD is plunging against the hope-driven Euro, which has soared 600 pips in the past week on nothing, the USD is now jumping against the CNY for no other reason than mere demagogic policy. And this environment in which central bank decisions are all that matter is the one in which traders hope to make a living based on rational market decisions (as otherwise one can flip a coin in Vegas)? Good luck.

From the WSJ

Traders said the unusual move by the People's Bank of China to set the dollar-yuan central parity, a daily reference rate, at a higher-than-expected level earlier Thursday indicated Beijing's continued displeasure following a U.S. Senate vote to pass legislation targeting Beijing's management of its currency.

 

But traders said they are curious to see how the yuan will perform later in the day, especially given the dramatic reversal of fortunes it experienced Wednesday.

 

Despite a similarly higher central parity rate Wednesday, the yuan erased all its earlier losses in late trading and ended the session stronger versus the dollar, likely a sign of a continued tug-of-war between the central bank and investors who remain confident in the yuan's long-term appreciation trend.

Bloomberg with more on the reason why this is just the beginning in the inversion direction of the USDCNY move which is sure to generate at least several subdural hematomas in the cranium of one Chuck Schumer:

The risk of a slump in trade may encourage Chinese officials to refrain from further interest-rate increases and add to support for companies after the State Council yesterday announced tax breaks for small businesses. The world is relying on China, the biggest contributor to global growth, to sustain an expansion that was 9.6 percent in the first half of the year.

 

“The leading indicators from the developed economies indicate that worse will follow” for exports, said Yao Wei, a Hong Kong-based economist at Societe Generale AG.

 

The yuan slipped 0.42 percent to 6.3849 per dollar as of 10:06 a.m. in Shanghai.

 

Appreciation of the yuan has weakened competitiveness and exporters are afraid to accept large or long-term orders, the customs bureau said in a statement. “Serious development problems, high unemployment rates and sliding consumer confidence” in the EU, U.S. and Japan, and slowing growth in emerging economies “present severe challenges,” it said.

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jarboejl's picture

Busy night at the ZH farm.

thefatasswilly's picture

We live during a period of power transition in America: from wasps to jews, catholics, chinks, and other such human filth.

History will find this one of its most comedic chapters. The wasps are well armed, yet do nothing to throw off their chains. Perhaps the majority of humans really do not treasure liberty. Perhaps the chinks are right when it comes to government . . . as a true lover of liberty, my weak desires for freedom flounder upon the harsh rocks of reality . . .

reader2010's picture

Your new masters are right here, and they will all live like the Americans in terms of daily oil consumption in no time. Mother Earth is FUCKED. Please drop all your nukes and God help us. 

http://www.chinasmack.com/2011/pictures/national-day-golden-week-holiday-crowds-throughout-china.html

Michael's picture

I'm more interested in the Two Hump Camel Squeeze.

The gift that keeps on giving.

I'm talking about the sub-prime debacle and now the prime debacle, just now showing up in the news, been hitting our shores for almost a year now.

Prime-X Bitches!

 

trav7777's picture

China won't let their exchange rate normalize.  This is ENTIRELY their doing.

The response is to tariff them.  It's as simple as that.

Amazing how the people calling for market this, market that seem to imply that the western nations should sit by idly while China steals.

jarboejl's picture

I don't know which faction of "human filth" from which you hail, but you are a sad, sad person.

Vlad Tepid's picture

Just a point to Mr. The Comedian-avatar:  True lover's of liberty yearn for liberty in the universal sense, not just WASPs (it's supposed to be capitalized, Jr.).  Note how the words "human filth" never made it into the Declaration of Independence, The Road to Serfdom, or The Wealth of Nations.

thefatasswilly's picture

lol.

You are entirely ignorant. You don't realize that we suffer from a major overpopulation crisis on this planet.

Until people stop consuming, until governments stop believing that GROWTH is the answer, I will view ALL of you human consumers as filth. Of course, this will never happen. Just think: most westerners drink water out of a PLASTIC, disposable bottle. Plastic is derived from oil, a rapidly depleting resource which is also used to lubricate the world economy. Fucking cancer cells.

Shove your bullshit "economic" books down your ass, faggot. We're bacteria in a petri dish, and you certainly don't understand that. I tire of seeing morons like you spout bullshit as if you know anything at all. Please shut the fuck up; what you say, think, or believe is irrelevant, insignifcant, and inane.

Again, stfu.

clymer's picture

spoken like a brainwashed, NWO shill. Go back to pleasuring yourself to watchmen comics

nmewn's picture

"You are entirely ignorant. You don't realize that we suffer from a major overpopulation crisis on this planet."

Then do the planet & us a favor.

Vlad Tepid's picture

I'm so glad you're clued in to what I do and do not realize.  So you can add that to your superpowers of shooting your pregnant Asian paramour, raping one of your superteam members, and shooting your daughter to make her stronger...oh wait that was "Kickass."  My apologies.

My ability to comprehend those "bullshit economic books" puts me in a different league from you and the lesson that I take away from them, given by men wiser than me, allow me to perceive your ant-like myopia like a colossus.

Since you gave me a nice target, I will shoot it down but not expend too much effort because I have a life to getback to:  Those disposable PLASTIC bottles are made from PLASTIC, which does not biodegrade and is recycleable so that any PLASTIC bottles made may be recovered even in particulate form and remade into new PLASTIC bottles for people to drink SAFE water out OF.  Of course you may prefer to continue to drink out of a psilocybin cap and I wish you the best of luck with that.  I will close by quoting a great fat ass I know: "what you say, think, or believe is irrelevant, insignificant, and inane."

thefatasswilly's picture

I'll try with your dumb ass again:

All modern economic systems assume infinite growth. We do not have infinite resources.

Does your tiny brain begin to see the problem yet, or are you going to continue in your Pavlovian rejection of the cold, hard truth? I would tell you to shut the fuck up, but I need to be constantly reminded just how worthless the majority of you humans truly are.

oldman's picture

Some people think it's the 'whiteman's problem'.

we sold the growth idea and continue to beat its drum when it is obvious that infinite growth never was anything other than infinite debt. I say forgive the debt and let the bank's take the hit even though this means our bank acconts will be drained in the panic and we'll be in line waiting forever to see our 'money.

What do you say superman or do you just spout racist shit?

and who do you work for?              just a curious oldman             om

 

BrocilyBeef's picture

The person behind "thefatasswilly" is a real loser.

thefatasswilly's picture

Not one person is able to counter my analyses. All you can do is attack my character. This board has nothing but ad hominem dumb fucks now. You are all despicable and wastes of oil and oxygen. Fucking cancer cells.

Kina's picture

as a true lover of liberty, my weak desires for freedom flounder upon the harsh rocks of reality

 

I never saw a lover of liberty and freedom hold such gross obsence racism and bigotry. Usually these people are lovers of dictators and despotism as they feed the masses racism to sure up their power.

LongBallsShortBrains's picture

Yoo twy yoo wike

Yoo wike yoo buy!

Missiondweller's picture

This is dangerous.

A trade war to China means millions of factory workers off the job and on the streets.

They fear unrest more than anything else. And this at a time when their banks are blowing up and their "economic miracle" may be about to pop.

Trade wars can turn into shooting wars. Just ask Imperial Japan.

thefatasswilly's picture

Yawn. World War III was already won by GRC.

Germany gained de jour command of western Europe, including Britain and the Mediterranean. Russia reinherited its former soviet territories. China took control of all eastern asia and western pacific ocean (a Persian Caliphate, backed by GRC, conquers the Middle East, but remains a minor player due to the depletion of oil).

And thus, Eurasia was divided. America, though weakened, still nurses ambitions. It IS on the other side of the world, after all . . .

thefatasswilly's picture

Though I have to mention one contingency (amongst many); it is very possible that Russia simply betrays Germany (it is unprofitable for those sneaky Cossack sluts to betray China due to the proximity of Moscow to Europe, you see) with Chinese assistance, and thus stabs Germany in the back to take control of all Europe.

Russian ambitions remain European, and China wants its northern neighbor distracted while it floods siberia with slant eyes. If this contingency plays out, 1984 will be realized.

Haha wait nevermind. People in 2011 line up and pay hand over fist for the telescreens. Thus is the nature of humanity.

Cynical Sidney's picture

what are you on about? put down that pipe you are way off target

Vlad Tepid's picture

He's regaling us with the plot of the science fiction novel he's working on...self-publishing soon.

cossack55's picture

Wish he would publish the chapter where the Cossacks kick his ass, the two-legged fool.

thefatasswilly's picture

Obviously, you are not a patron of the fine arts, and have thus not seen the movie Snatch.

Vlad Tepid's picture

A snatch is many things.  Only Michelangelo can make it fine art.

thefatasswilly's picture

If you provide a rational analysis and prove me wrong, you might be warranted in your comment.

As it stands now, however, you are doing nothing but proving that you're a fucking moron.

I suggest you shut the fuck up, boy.

Kina's picture

Wow, what a totaly racist, xenophobic bigotted pig you are. Somebody leave the lid off the sewer?

trav7777's picture

take your rayciss label and shove it up your ass

thefatasswilly's picture

This forum has really declined, huh? Full of short sighted, politically correct dumbfucks now.

I actually like you in comparison, fuck.

Vlad Tepid's picture

...because you appear to be in the business of rational analysis.

Ahmeexnal's picture

Tolkien warned us about Germany in LOTR. Sadly, few cared to understand the real life teachings of his works.

But rise the peoples of middle earth shall against the tyranny of the dark lords of Mordor (Germany).

And when they do, the cities of europe will again be witness to the brutality of the 14th century.

When the mobs claim infinite justice, the german opressors and their french laphogs will find a bitter end.

thefatasswilly's picture

uh no

Please read some Nietzsche, (Franz) Oppenheimer, and/or Hegel for more information.

clymer's picture

You may in fact be the most vitriolic nihilist ever to pollute this board with such self-loathing garbage (you are a human afterall).

I predict eventual suicide

trav7777's picture

somebody needs to carve a swastika into your greasy bald head

Cynical Sidney's picture

"A trade war to China means millions of factory workers off the job and on the streets."

i beg to differ; waging a trade war against china, means we will create more factory jobs, hire more workers, and get manufacturing back in the states. american businesses need a level playfield to be competitive against foreign companies, it's time to secure and enforce our IP rights.

moskov's picture

I thought Bernake already did that. Your offensive remark surely insulted My beloved Fed chairman

El Gordo's picture

Boy I guess our fearless Senatorial leaders scared them, didn't they?  What happens to our military folks if the Chinese decide not to make any more boots? What's that old saying about fools walking in where angels fear to tread?

 

trav7777's picture

at some point, enough is enough.  China has been permitted to steal for too long.  It's time for it to stop.

Queen Vicky had more balls than our present "leadership."  She sailed the Royal Navy without hesitation and shoved opium up their asses

UP Forester's picture

Peak Population....

BillyBoy22's picture

If a war with China starts, I am so out of here.  I hear New Zealand, Denmark, and Abu Dhabi are nice this time of year.  Very much not interested in World War 3 just to appease Krugman

thefatasswilly's picture

Have fun trying to avoid the biochemical weapons, unless you plan on moving to the moon.

Vlad Tepid's picture

Can you explain what biochemical weapons are?  Chemical weapon's effects are fairly localized.  Or did you mean biological weapons but just wanted to sound like you were in a movie?

UP Forester's picture

I don't want to put words in his snout, but maybe he meant weaponized bio-mechanical nano-bots that shit out hydrochloric acid in your inner-ear....

clymer's picture

In case you guys haven't noticed, this dude shapes his entire sense of awareness from that which he reads in a fucking comic book

 

http://en.wikipedia.org/wiki/Watchmen

Vlad Tepid's picture

I noticed.  He's getting to be fun, though.  The irony is that although he seems obsessed with human pollution he is oblivious to the extent that he is polluting our discussion of currency wars (a topic he is no doubt totally unqualified to expound upon.)

Pay Day Today's picture

bio/chemical weapons are pretty useless militarily. As long as you are several hundred yards away from an impact site you should be ok. Can't say the same for say, a 10 kT tactical nuke.

phraseshifter's picture

gotta repair that boat...

Raynja's picture

wall street offers way more leverage than vegas

infiniti's picture

It's over. Books have been cooked. Quotes are quotes, except worse. Chinese real estate is Lehman x10. Finito.

The US is bad, Europe is worse, China is somewhere between Argentina and Greece.