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This post was edited by abramicus at 2015-9-8 07:02|
Lest our readers be led astray by news reports from abroad that China's foreign currency reserves dropped because it allowed the Yuan to devalue from 6.20 to 6.39 CNY/USD from August 10 to 12, we must make it very, very clear, that China's foreign currency reserves dropped NOT because of the devaluation, but because of the attempt to REVALUE THE YUAN TO ITS OVERVALUED EXCHANGE RATE, from 6.44 to 6.39 CNY/USD and earlier, to slow down the devaluation of the Yuan.
Who devalued the Yuan? Not China. It was the public, ALL those in China and the foreigners, who sold their Yuans, and if the PBOC did not choose of its own free will to sell its DOLLAR RESERVES to buy yuans, not a single dime would have been lost from China's foreign currency reserves. Not a penny, even.
IT WAS THE ATTEMPT TO REVALUE THE YUAN, NOT THE DEVALUATION, THAT COST CHINA 94 BILLION DOLLARS, AN EXERCISE THAT DOES NOT BENEFIT CHINA IN ANY WAY, BUT WHICH WAS DONE NONETHELESS IN THE NAME OF CHINA, AND AT THE EXPENSE OF THE CHINESE PEOPLE'S FOREIGN RESERVES. THE DEVALUATION OF THE YUAN WOULD HAVE SAVED CHINA'S MANUFACTURING SECTOR, BUT THE PBOC GALLANTLY STEPPED IN, USING CHINA'S OWN 94 BILLION DOLLARS OF SAVINGS TO KEEP THE RENMINBI OVERVALUED BY 50% RELATIVE TO THE YEN, AND PREVENTED CHINA'S MANUFACTURING SECTOR AND CHINA'S STOCK MARKET THAT IS BASED ON THEIR EARNINGS, FROM MAKING AN OVERDUE AND SUSTAINABLE RECOVERY.