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China's Reserve Dropped $94B Not After Devaluation, But After Revaluation   [Copy link] 中文

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Post time 2015-9-8 06:48:53 |Display all floors
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.



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Post time 2015-9-8 11:01:19 |Display all floors
NO MORE EXPERIMENTING VOODOO IDEAS ON YOUR COUNTRY, PLEASE - GO BACK TO SCHOOL WHERE YOU BELONG.

Let us hope China would not be wasting any more hard earned foreign currency reserves just to satisfy a token symbol of "strength" often associated with the Yuan exchange rate, which in reality is not the real measure of strength, but merely a price tag put on all Chinese goods.  Making the price on the tag higher does not make the goods more valuable.  If they are not selling, their actual value decreases.  The real measure of strength is growing sales accompanied by growing profits.  The price on the tag may be lower, but that does not mean the owner is poor.  His net worth may in fact be rising as China's did by 8-9% every year, when the Yuan exchange rate was much lower.  Time to return to what really works, and stop playing around with academic theories about what should work.  Clearly, this time around, China is not using the older but more dependable models of Deng.  And the newer models are full of defects, they are endangering the economy of the country and the security of the nation.  Time to stop these sophomoric experiments on China.  Go back to the lab, find a pilot study, learn from your mistakes, but don't let the whole country and an entire generation pay for your mistakes.

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Post time 2015-9-8 11:02:47 |Display all floors
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Post time 2015-9-8 11:07:25 |Display all floors
incarnate Post time: 2015-9-8 11:02
Is China somehow and somewhat getting screwed up by its own "Drink Tank"?

The bubble has burst.



And you lie naked for everyone..............



I've made my living, Mr. Thompson, in large part as a gambler. Some days I make twenty bets, some days I make none. There are weeks, sometimes months, in fact, when I don't make any bet at all because ...

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Post time 2015-9-8 11:22:07 |Display all floors
He means it is over, and won't be able to burst any more.  Just like a mountain guide telling his group, it has avalanched, it has avalanched, and by taking the same steep route back home, gets buried by the next one.

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Post time 2015-9-8 11:30:13 |Display all floors
Only the Chinese government can set the value of the yuan not the market

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Post time 2015-9-8 13:52:46 |Display all floors
dusty1 Post time: 2015-9-8 11:30
Only the Chinese government can set the value of the yuan not the market

Big fat lie.  The Chinese government can just as easily let the Yuan float down towards 6.50 to 7.00 without raising a finger or spending a dime.  And it should for two good reasons.  It is good for China.  And, it is good for the world.

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