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CHINA REMAINS SHACKLED BY A STILL OVERVALUED YUAN   [Copy link] 中文

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Post time 2015-8-17 05:52:55 |Display all floors
All the celebration of China having found the guts, and grown the intelligence to reject the dictat of the IMF that it manipulate its own Yuan exchange rate to an overvalued level of 6.20 CNY/USD, allowing it to float on August 10, 2015, in accordance with market demand to 6.32 and even down to 6.52, turned into another "China Dream" as the "New Normal" of overvaluation was re-asserted by China's monetary authorities, who sold hard earned US dollars to buy up Yuans that cost it nothing to produce, in a show of wealth and waste, driving the Yuan back up to 6.39 CNY/USD by August 12, 2015.

So, what has China achieved?

Liberation from the shackles of Yuan exchange rate overvaluation?  No, not liberation.  Just a reprieve.

The manufacturing sector will be allowed to breathe a little longer, that is all.

The inmates have retaken the asylum, it seems, and the madness of cannibalizing one's own factories, dollar reserves, and taking on trillions of foreign-currency-denominated loans that put a LOCK on the MANACLES for good, continues, while the keystone of a corruption-free society remains missing throughout - the accountability of those in authority for the losses suffered by the country simply does not exist.  Yes, the sheriff and his posse are out in the fields chasing the robbers, conveniently, while the bank is being emptied as before.



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Post time 2015-8-17 17:15:40 |Display all floors
This post was edited by abramicus at 2015-8-17 17:25

WHERE HAVE ALL THE HUNDREDS OF BILLIONS OF DOLLARS GONE?  

Finally, as if to show accountability, someone from the PBOC told the press that from now on, the Yuan will float according to market supply and demand, and only at the extremes will the PBOC intervene, either to raise or lower the Yuan exchange rate.

And so, we watched the Yuan fluctuate, as it should, or trend up or down, at the least, but there was neither fluctuation or trend.

If something does not fluctuate or have a trend, it has to be dead.  It stayed at 6.3945 or thereabouts, unlike on August 10 & 11, when it really trended down, reversed by the PBOC's directed sale of dollars, to buy up the Yuan, etc.

But we all know the Yuan is not dead.

It is simply being fixed all over again at an overvalued exchange rate, again requiring the spending of China's dollar reserves, throughout the trading day, to keep the Yuan overvalued, even if by less than a week ago, nevertheless continuing to be spent in the name of buying up Yuans that China could print for peanuts.  So much for the brief glimmer of accountability.  It turned out to be not.  The spending of China's foreign reserves goes on, under the excuse of defending the Yuan, when it should have been allowed to fall naturally, as dictated by market forces.  The loss of hundreds of billions of dollars of China's foreign currency reserves remains unexplained and its supposed benefits unaccounted for.  The keystone of anti-corruption campaigns, the stopping of losses to the country even long before the culprits are identified, remains unsatisfied.

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Post time 2015-8-18 22:57:20 |Display all floors
abramicus Post time: 2015-8-17 17:15
WHERE HAVE ALL THE HUNDREDS OF BILLIONS OF DOLLARS GONE?  

Finally, as if to show accountability, s ...

Now you said yuan is overvalued, and therefore have to be depreciated.  3 years later you will said yuan is undervalued, and need to be appreciated, by 30%.  Is this how the hedge fund make free money without work ?

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Post time 2015-8-20 15:17:40 |Display all floors
IF THIS IS THE NEW NORMAL, THEN THIS IS NOT THE NEW CHINA.

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Post time 2015-8-20 15:54:27 |Display all floors
bushier Post time: 2015-8-18 22:57
Now you said yuan is overvalued, and therefore have to be depreciated.  3 years later you will sai ...

Hedge funds make money by taking risk



Fair and square


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 2015-8-21 11:35:49 |Display all floors
This post was edited by abramicus at 2015-8-21 11:39

CHINA IS PAYING $40 BILLION DOLLARS PER MONTH TO SUSTAIN THE OVERVALUED YUAN EXCHANGE RATE - BLOOMBERG NEWS (AUGUST 17, 2015) SAYS:

" China’s foreign-exchange reserves are expected to drop by some $40 billion a month as the central bank intervenes to support the yuan, a Bloomberg survey showed.

The holdings, the world’s largest, will decline to $3.45 trillion by year-end from $3.65 trillion at the end of July, based on the median estimate of 28 strategists and traders surveyed following last week’s surprise devaluation of the currency. The forecasts ranged from $3 trillion to $3.71 trillion. The currency is seen weakening 1.6 percent to 6.50 a dollar in the remainder of 2015, the survey showed...

The People’s Bank of China is limiting the yuan’s depreciation to prevent an exodus of capital as it contends with the slowest economic growth in more than two decades. While that support is eating into the nation’s foreign reserves, which fell $192 billion in the last seven months, the holdings are still more than triple those of any other nation."


IT IS TIME FOR CHINA TO STOP BUYING YUANS WITH HARD EARNED DOLLARS, PLAYING THE RICH MAN, AND SAVE SOME MONEY FOR THE NEXT GENERATION TO USE AS ITS CAPITAL . . . OR, CHINA WILL BE INSOLVENT IN 2 YEARS, AND BANKRUPT IN 5 YEARS.

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Post time 2015-8-22 02:12:02 |Display all floors
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