China forex reserves in record fall as Beijing tries to calm markets

[antonius123]

lol, 3.6 trillion is nothing. Japan, alone, has about $3 trillion in forex and pension fund. And we are only what? 1/10th your population and waaaaay overdeveloped than China.

The point is capital flight is a totally different animal. Look what happened to Russia vis a vis Sanctions.

I doth say: be weary.

If your pension fund is not in forex hence it is not considered as forex reserves.

Foreign-exchange reserves (also called forex reserves or FX reserves) are assets held by a central bank or other monetary authority, usually in various reserve currencies, mostly the United States dollar, and to a lesser extent the euro, the pound sterling, and the Japanese yen, and used to back its liabilities

 

[Aepsilons]

dollar is in demand because people expect fed to raise interest rates. will they do it? probably not. but the rate expectation is making people buy dollar and sell other currency. if you look around, chinese yuan is still the second strongest currency after the dollar.

as chinese central bank officials said, china is running current account and trade surpluses. there is no basis for continued yuan weakness.

the u.s. is preparing to fleecing other countries. it printed trillions of dollars in the past few years through socalled qe. as a result american corporations accumulated trillions of dollar. as dollar strenghens and other currencies collapses, they are ready to pounce on other countries, buying and looting their valuable asset at cheap prices. china is wise to have a stable currency.

In other words, grand, Dollar is Rex?

 

[EAsian]

So basically China is spending Billions from its FX reserves trying to stabilize the currency. But a falling FX reserves only indicates to the market that the currency value is artificially propped up which leads to the currency falling further.This is basically leading to a Capital outflow from the country. As the currency falls it will be harder to shift its assets overseas so i assume this will only speed up the Capital outflow ? WHich means more money has to be spent from the FX reserves on the currency...so...basically a viscous cycle....leading to investors ??

am i right ?

Let's see who have more bullets.

 

[Aepsilons]

If your pension fund is not in forex hence it is not considered as forex reserves.

Foreign-exchange reserves (also called forex reserves or FX reserves) are assets held by a central bank or other monetary authority, usually in various reserve currencies, mostly the United States dollar, and to a lesser extent the euro, the pound sterling, and the Japanese yen, and used to back its liabilities

Japanese pension fund is used in the same processes as forex, in fact it is used for aggressive overseas mergers and acquisitions. Japan has diversified Her abilities in this paradigm.

Let's see who have more bullets.

I think a better saying is:

Let's see who has more coins.

 

[antonius123]

Japanese pension fund is used in the same processes as forex, in fact it is used for aggressive overseas mergers and acquisitions. Japan has diversified Her abilities in this paradigm.

In that case the pension fund should have been already counted in the Forex reserve USD 1.2 billions.

 

[Aepsilons]

In that case the pension fund should have been counted in the Forex reserve USD 1.2 billions.

It's not however. Since it is not governmentally controlled but through various civic and private groups. It influenced governemental policy, to an extent, but is not part of governmental measures. Hence it is not in official forex data sheet(s).

 

[Great Sachin]

China is in trouble

 

[Aepsilons]

China is in trouble

Yes, there are concerns. Great concerns.

 

[EAsian]

It's not however. Since it is not governmentally controlled but through various civic and private groups. It influenced governemental policy, to an extent, but is not part of governmental measures. Hence it is not in official forex data sheet(s).

Then it cannot be used as bullets after all.

 

[antonius123]

It's not however. Since it is not governmentally controlled but through various civic and private groups. It influenced governemental policy, to an extent, but is not part of governmental measures. Hence it is not in official forex data sheet(s).

Yeap. But cannot be called as (forex) reserves.

Central bank/ government cannot use pension fund to intervene market.

 

[Bussard Ramjet]

China is rich and can sustain such falls. Speculator will get their hands burn. Nobody can fight USD 3.55 trillion. Not even EU and US national reserve combine. Gerorge Soro learn a hard lesson not to mess with CCP. The fall in stock market is just an adjustment. Further fall is not expected.

No body is rich enough to continuously sustain out flows.

The calculus is very simple. A country has a particular exchange rate with respect to other countries. The exchange rate is set by currency movements in/out of the country, so that the net exchange of the currency is at equillibrium.

China and other countries have deliberately hoarded up foreign exchanges so as to devalue their currency, or prevent it from rising, and to get some control over exchange rates.

But right now, confidence is weak in Chinese economy for many people. A lot of people are withdrawing money, both foreigners and Chinese. And when yuan is sent out from China, and if there is excess of yuan being converted to dollar, either the exchange rate must weaken yuan, or China will have to intervene in its markets by buying up its own currency using FX reserves.

China is doing the latter to promote consumption, living standards, and get RMB recognition as a reserve currency.

But, that is where I think Chinese policy makers overplayed their hands.

Right now, China should not focus on reserve currency status, but more on growth by all means.

The USD became the reserve currency only after 4 decades of surpassing the British Empire as the biggest economy. Reserve Currency status needs confidence, and established institutional frameworks, plus some geopolitical hedge.

China should have seriously thought of reserve status only after having overtaken the US economy, and having done so 10 years back.

 

[Bussard Ramjet]

lol, 3.6 trillion is nothing. Japan, alone, has about $3 trillion in forex and pension fund. And we are only what? 1/10th your population and waaaaay overdeveloped than China.

The point is capital flight is a totally different animal. Look what happened to Russia vis a vis Sanctions.

I doth say: be weary.

1. Japan doesn't have 3.6 trillion in foreign reserves. (It is 1.3 Trillion; if you still disagree cite your source)
2. Pension funds are denominated in yen, and don't count. China also has huge savings in its banks

Finally a point for both Chinese and Japanese here, DON'T USE ME TO SUPPORT YOUR PREJUDICE.

Chinese financial system is undoubtedly in stress, and they have made huge blunders in their stock market. Chinese economy is also in a rough patch.

But that is it. Neither is Chinese economy collapsing as if some would have you believe, nor is Chinese economy growing at 7% as Chinese government would have you believe. The truth is complicated, and multi-faceted, and doesn't deserve broad brushes of good or bad.

 

[Beast]

No body is rich enough to continuously sustain out flows.

The calculus is very simple. A country has a particular exchange rate with respect to other countries. The exchange rate is set by currency movements in/out of the country, so that the net exchange of the currency is at equillibrium.

China and other countries have deliberately hoarded up foreign exchanges so as to devalue their currency, or prevent it from rising, and to get some control over exchange rates.

But right now, confidence is weak in Chinese economy for many people. A lot of people are withdrawing money, both foreigners and Chinese. And when yuan is sent out from China, and if there is excess of yuan being converted to dollar, either the exchange rate must weaken yuan, or China will have to intervene in its markets by buying up its own currency using FX reserves.

China is doing the latter to promote consumption, living standards, and get RMB recognition as a reserve currency.

But, that is where I think Chinese policy makers overplayed their hands.

Right now, China should not focus on reserve currency status, but more on growth by all means.

The USD became the reserve currency only after 4 decades of surpassing the British Empire as the biggest economy. Reserve Currency status needs confidence, and established institutional frameworks, plus some geopolitical hedge.

China should have seriously thought of reserve status only after having overtaken the US economy, and having done so 10 years back.

The problem is Chinese government is simply too rich to go against. Panic selling by public but if Chinese governement keep buying these state owned company blue chip stock. Price stable. If speculator think they have a good chance of winning against USD3.55 trillion. I will say good luck to them. That is what happen to George soro.

 

[Bussard Ramjet]

Yeap. But cannot be called as (forex) reserves.

Central bank/ government cannot use pension fund to intervene market.

Unfortunately, the government can use the pension funds in local stock markets, something which China is doing, and which can have catastrophic consequences.

 

[EAsian]

No body is rich enough to continuously sustain out flows.

The calculus is very simple. A country has a particular exchange rate with respect to other countries. The exchange rate is set by currency movements in/out of the country, so that the net exchange of the currency is at equillibrium.

China and other countries have deliberately hoarded up foreign exchanges so as to devalue their currency, or prevent it from rising, and to get some control over exchange rates.

But right now, confidence is weak in Chinese economy for many people. A lot of people are withdrawing money, both foreigners and Chinese. And when yuan is sent out from China, and if there is excess of yuan being converted to dollar, either the exchange rate must weaken yuan, or China will have to intervene in its markets by buying up its own currency using FX reserves.

China is doing the latter to promote consumption, living standards, and get RMB recognition as a reserve currency.

But, that is where I think Chinese policy makers overplayed their hands.

Right now, China should not focus on reserve currency status, but more on growth by all means.

The USD became the reserve currency only after 4 decades of surpassing the British Empire as the biggest economy. Reserve Currency status needs confidence, and established institutional frameworks, plus some geopolitical hedge.

China should have seriously thought of reserve status only after having overtaken the US economy, and having done so 10 years back.

I don't worry it is a continuously sustain out flows.It's not only China's problem ,the whole devoloping countries are suffering from it.And We are the strongest amongst them.