Is this move by China in part because USD has been appreciating too much lately and dragging the Yuan up? And therefore we should expect a decrease in value of Yuan as calculated by PBOC "basket"?
That would certainly be a surprise to many, including Geithner and those in Congress complaining about the manipulated Yuan...
Monday, and the weeks following will be interesting.
Seat belts on please.
Further from the ZH article:
Lastly, with less dollar purchasing by the PBoC, and also courtesy of recent foreign trade deficits, should the bank be serious in its intentions, this simply means that increasingly fewer dollars will be held in the Chinese FX reserves, which in turn will mean increasingly lower Indirect bidder (and/or Direct assuming this particular category is merely China acting covertly out of London, instead of just the Fed monetizing surreptitiously) interest will drop to the point where Primary Dealers (and UK) will be the only end purchasers of US bonds.
Either way, this is sure to play major havoc with already extremely volatile EUR, CHF, GBP and JPY pairs.
From comments to the article:
It seems to me that the USA is far less important than its citizens believe it is.
I'm guessing that it wasn't the USA which formed the impetus for this move
and it won't be the USA which is most affected.
I've been watching the Baltic dry Index collapsing over the past few months.
Its gone down almost as fast as the Euro/USD pair.
Yet, appalachian coal prices have been holding steady.
Then it dawned on me: if the Chinese currency is pegged to the dollar
then the Euro/Renmimbi pair has also declined hugely,
which means that Chinese goods destined for Europe have
increased enormously in price ... and the quantity slowed to a trickle ...
...and that's got to be killing the chinese economy ...
What the chinese probably want right now is to be able to
devalue their currency right along with everybody else.
Are they planning some intervention a la BOJ?
Roubini on same:
reuters.com
Bottom line:
I would love to see metals go up... but is that in Chinas interest re employment... they will be administering the "peg"... how will they play it???
RJA |
