Chinas currency hits record low against the dollar

[F-22Raptor]

China’s central bank warned market participants against speculating on the yuan, after the currency slid to its weakest level against the dollar in more than 14 years and hit a record low in international trading.

On Wednesday, the offshore yuan depreciated to more than 7.2 to the dollar for the first time since a separate system for trading the currency outside mainland China was launched more than a decade ago.

China Central Bank Warns Against Yuan Speculation After Currency Sinks

The yuan weakened past 7.2 to the dollar, complicating Chinese policy makers’ efforts to boost the country’s economy with lower interest rates.

www.wsj.com

Going to be a brutal year of growth for China

 

[REhorror]

USA is harvesting the world, no one is spared.

 

[MH.Yang]

USA is harvesting the world, no one is spared.

1, The main reason for the devaluation of CNY is that the Central Bank of China cut interest rates significantly, rather than the USA raised interest rates. Before the interest rate cut in China, CNY did not depreciate because of the interest rate increase in the USA.
At present, the benchmark interest rate for overnight bank lending is 3% in the USA and 0.75% in China.

2, The USA cannot use the high dollar to acquire Chinese domestic assets. Because the Chinese government has tightened the FPI channel, and the US dollar cannot be freely converted into CNY.

 

[REhorror]

1, The main reason for the devaluation of CNY is that the Central Bank of China cut interest rates significantly, rather than the USA raised interest rates. Before the interest rate cut in China, CNY did not depreciate because of the interest rate increase in the USA.
At present, the benchmark interest rate for overnight bank lending is 3% in the USA and 0.75% in China.

2, The USA cannot use the high dollar to acquire Chinese domestic assets. Because the Chinese government has tightened the FPI channel, and the US dollar cannot be freely converted into CNY.

So it's actually a strategy for Chinese economists to lower the yuan and improve export? Hmmm.

 

[mili]

Most major currencies are at or near record low against usd so CNY is fine.
usa is forced to raise interest rate due to inflation. China can afford to cut it due to tame inflation. Very simple.

The worst part for usa is their trillions in debt. With rising interest rate, interest payments alone will rise by hundreds of billions. Not to mention it's bad news when ur debt is in a currency that is rising.

So either die by inflation or debt payment for usa. Very simple.
But that's ok, kids get to cheer usd is rising. lol

 

[applesauce]

???

CNY is barely middle of the pack of the major currencies when measure in decline against the us dollar.

if china is going to have a "brutal year of growth" because of this, the rest of the world has already gone off a cliff.
additionally. because every major currency has declined against the dollar, the only effect this has on china is that its exports are even more competitive, putting salt on the already festering european wound, which is being de-industrialized and ever more reliant on china as we speak.

it makes chinese purchases of american goods more expensive, but thats okay, the us mostly export agricultural goods and minerals to china, anything hard to get is already banned anyhow.

as far as grains are concerned, china is getting grains from russia additionally they are getting oil from russia, china does get gas from the us, but it turns around and sells that same gas to europe at inflated prices for super easy profit while using russian gas domestically.

and this depreciation is clearly seen as a non-issue. otherwise the people's bank of china would have intervene already, china has the world's greatest financial war chest when it comes to defending its currency(world's largest reserves) but it hasnt opted to use it in this case, because there no need.

 

[MH.Yang]

So it's actually a strategy for Chinese economists to lower the yuan and improve export? Hmmm.

I think the Chinese government should have two goals.

First, create a window for clearing up domestic debt and create good conditions(low interest rate) for the next local financial reform.

Second, in the general environment of global currency depreciation, if CNY continues to be strong, it will be unfavorable for us to maintain our export advantage. The early interest rate increase in the USA did not make CNY reach the expected depreciation. So the People's Bank of China directly chose to cut interest rates. Different from inflation in other countries, China's CPI is very low, so China has the ability to cut interest rates.


Unlike many countries that are fighting against currency devaluation, China has been fighting against currency appreciation. The appreciation of CNY is not conducive to China, which is also the reason why the USA has repeatedly accused China of manipulating its currency.

 

[Cheepek]

So it's actually a strategy for Chinese economists to lower the yuan and improve export? Hmmm.

No. China wants to control the slide but can't, like everyone else.

https://www.bloomberg.com/news/arti...nks-to-respect-yuan-fixing-as-currency-slumps

 

[MH.Yang]

No. China wants to control the slide but can't, like everyone else.

https://www.bloomberg.com/news/arti...nks-to-respect-yuan-fixing-as-currency-slumps

The Chinese govt warns Chinese speculators not to invest in CNY, because CNY will remain low for a long time.

This shows that the Chinese government does not intend to intervene in the decline of CNY, so it does not want domestic speculators to suffer losses.

 

[Cheepek]

The Chinese govt warns Chinese speculators not to invest in CNY, because CNY will remain low for a long time.

This shows that the Chinese government does not intend to intervene in the decline of CNY, so it does not want domestic speculators to suffer losses.

What rubbish is this

 

[Mista]

Unlike many countries that are fighting against currency devaluation, China has been fighting against currency appreciation. The appreciation of CNY is not conducive to China, which is also the reason why the USA has repeatedly accused China of manipulating its currency.

Nah, the CNY is actually fairly valued. The current account surplus has been around 0-2% of GDP in the past few years, and FX intervention doesn't indicate that China is purchasing foreign reserves and selling CNY on a large scale.

I would say it's both ways. China has been fighting against currency appreciation as much as fighting against currency depreciation. They have implemented strict capital outflows and spent almost $1tril to defend their currency in 2015. Their forex reserves has been hovering around $3tril+ since then.

Currency Manipulation Update for 2015-17

The Trump administration's revision of the Korea-US Free Trade Agreement (KORUS), negotiated in late March, was reported to have contained a side agreement that could have broad implications for US trade policy in the future. That side agreement calls for a ban on currency manipulation by the...

www.piie.com

 

[MH.Yang]

Nah, the CNY is actually fairly valued. The current account surplus has been around 0-2% of GDP in the past few years, and FX intervention doesn't indicate that China is purchasing foreign reserves and selling CNY on a large scale.

I would say it's both ways. China has been fighting against currency appreciation as much as fighting against currency depreciation. They have implemented strict capital outflows and spent almost $1tril to defend their currency in 2015. Their forex reserves has been hovering around $3tril+ since then.


View attachment 883396

View attachment 883398

View attachment 883397
View attachment 883400
View attachment 883401

Currency Manipulation Update for 2015-17

The Trump administration's revision of the Korea-US Free Trade Agreement (KORUS), negotiated in late March, was reported to have contained a side agreement that could have broad implications for US trade policy in the future. That side agreement calls for a ban on currency manipulation by the...

www.piie.com

Of course, the monetary policy of each central bank is usually to maintain stability. However, the pressure of each country comes from different directions.

In 1994, one dollar was converted to 8.6CNY.
In 2022, 1 US dollar was converted to 7.2CNY.

In 1994, one dollar was converted to 11.2 rupees.
In 2022, one dollar was exchanged for 82.0 rupees.

By comparison, we can know whether the pressure faced by the Central Bank of China comes from appreciation or depreciation.

 

[Mista]

Of course, the monetary policy of each central bank is usually to maintain stability. However, the pressure of each country comes from different directions.

In 1994, one dollar was converted to 8.6CNY.
In 2022, 1 US dollar was converted to 7.2CNY.

In 1994, one dollar was converted to 11.2 rupees.
In 2022, one dollar was exchanged for 82.0 rupees.

By comparison, we can know whether the pressure faced by the Central Bank of China comes from appreciation or depreciation.

答非所问

 

[huanghong]

Nah, the CNY is actually fairly valued. The current account surplus has been around 0-2% of GDP in the past few years, and FX intervention doesn't indicate that China is purchasing foreign reserves and selling CNY on a large scale.

I would say it's both ways. China has been fighting against currency appreciation as much as fighting against currency depreciation. They have implemented strict capital outflows and spent almost $1tril to defend their currency in 2015. Their forex reserves has been hovering around $3tril+ since then.


View attachment 883396

View attachment 883398

View attachment 883397
View attachment 883400
View attachment 883401

Currency Manipulation Update for 2015-17

The Trump administration's revision of the Korea-US Free Trade Agreement (KORUS), negotiated in late March, was reported to have contained a side agreement that could have broad implications for US trade policy in the future. That side agreement calls for a ban on currency manipulation by the...

www.piie.com

the United States seems to have always believed that the renminbi is undervalued and should need to be appreciated. In 2019, the U.S. Treasury Department even accused China of currency manipulation.

China responds to US after Treasury designates Beijing a 'currency manipulator'

The response from the People's Bank of China comes at a time of rapidly intensifying tensions between the world's two largest economies.

www.cnbc.com

 

[REhorror]

Chinese bros might call me out on this, but this is literally Japan's playbook (don't raise interest rates, keep yen/yuan low).