China's Yuan Is Now Plunging Faster Than During 2015's Devaluation

Another China open, another lower renminbi fix, and another 2 handle plunge in offshore Yuan...

The People’s Bank of China set its daily reference rate for the yuan (dark red line in the chart above) weaker than the psychological level of 6.7 per dollar for the first time since August 2017, suggesting officials are comfortable with the pace of depreciation amid a trade dispute with the US.

Offshore yuan is now at 12-month lows, down almost 9% from the March highs and collapsing at an annualized pace of around 30%!! That is a faster plunge than the 2015 post-devaluation slide (which was around a 23% annualized slide)...

 

It does make one wonder how long this will last before it starts to ripple across the Pacific?

Or are Chinese Yuan sellers using their newly acquired dollars to buy S&P calls?

Comments

roddy6667 Wed, 07/18/2018 - 23:02 Permalink

The RMB is not "plunging" it went from 6.2 to 6.7. It has ranged between 6.2 and 8.0 in the last decade without affecting China much at all. The economy kept growing, the middle class kept getting bigger, and everybody was better off than the year before and ten years ago. 

All these Doom & Gloom peddlers with their chart porn have no idea what is going on in the real world.

Chairman Wed, 07/18/2018 - 23:13 Permalink

I am very happy.  I will soon sell my property in Sun Valley, Idaho and buy a new place in Guizhou, Sichuan, China.  Guizhou, Sichuan, China is the new Sun Valley, Idaho and I saw other retired expats that have already purchased property there.  I think I will pull the trigger as soon as USD/CNY hits 7.  Imagine no property tax!  Of course there is no golf but I suck at golf anyway.  Being from the South I can't seem to shake my NASCAR dreams while driving a golf cart which got me banned from Sun Valley.   I would like to especially thank my little Chinese sugar babies that taught me how to speak the Sichuan dialect of Mandarin.

roddy6667 Chairman Wed, 07/18/2018 - 23:25 Permalink

Look into the small city of Penglai. It's on the border of the Bohai Sea and the Yellow sea. Ancient port, a lot of history. Wine region. lots of great restaurants because of the influx of tourists. Homes near or on the sea are quite reasonable. We vacationed there last year. New homes were a fraction of what they are in our city of Qingdao.

In reply to by Chairman

Boonster Chairman Thu, 07/19/2018 - 08:11 Permalink

My wife is from Chongqing and her father is from Guizhou. I lived there for a few years and really liked it but I'd be careful about buying property. It's the Chinese way but the construction quality is shit. The apartment I lived in at Chongqing University was new when I moved in but 5 years later it was falling apart. It's the same all over China. Maybe if you are going to buy and quickly resell, that would be different. I refuse to buy and will only rent but my wife completely disagrees. This video might give you some insight about what scares me.

https://www.youtube.com/watch?v=_lAoTBVTTO8

In reply to by Chairman

roddy6667 Boonster Thu, 07/19/2018 - 22:43 Permalink

I don't make any decisions based on Youtube. I bought in 2010. I'm quite pleased with the quality. I worked in construction for 15 years when I was younger. No, the finish is not as good as American or European housing, but they must build quickly. What would they do? Tell hundreds of millions of people they need to wait another ten years to move out of their hovel because the quality of the finish of new homes needs to be 100%? 

 

 

In reply to by Boonster

Let it Go Thu, 07/19/2018 - 00:49 Permalink

When you consider just how destabilizing currency swings can be it is easy to see how a strong dollar could obliterate the global economy. It should not be a surprise in our current global economy that behind the curtain central bankers could be busy manipulating currencies so they trade in a narrow range that will not rock the boat.

Many market watchers have become dubious of recent market moves and over the top efforts of both governments and central bankers to keep this so-called recovery moving forward. More on the merit of this controversial opinion and the ramifications it holds in the article below.

 http://Currencies Are Trading In A False Paradigm.html

CashMcCall Thu, 07/19/2018 - 01:51 Permalink

This is automatic devaluation and it is caused by the US Dollar reserve high dollar policy and Trump Tariffs. A dozen currencies, not just they Yuan are losing ground on the exchanges. Many are at multi year lows. The Yuan does not have to devalue, Trump is doing it for them. 

This will in fact shut off US exports and stimulate Chinese exports. So Trump once again will obtain exactly the opposite results as he intended. Trump is a very stupid man who claims to know all and knows nothing at all. 

Money_for_Nothing CashMcCall Thu, 07/19/2018 - 07:33 Permalink

So are the Halloween and Christmas trinkets being loaded on ships in China even as we speak? Tariffs have been in effect for less than a week. Doesn't matter if all these valuable goods are free. Takes gas and fuel to distribute them. If China shuts off Micron chips then China is effed. No Chinese Tariffs on a Micron chip. They steal a design. Then China forbids imports. On or off no in between. US could tank China by disallowing Micron shipments to China for IP theft.

In reply to by CashMcCall