“Will China succeed in achieving its three objectives?”
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China Southern Airlines, Asia’s largest carrier apparently, had more than $16.5 billion in dollar-denominated debt at the end of 2014.
China continues to grapple with a deteriorating economy.
Strictly speaking, this was not a “devaluation“. That has laid a solid foundation for a stable exchange rate. What prompted the PBoC to take such a measure? If it is increased, the term is “revaluation”. Incoming data on consumer inflation, a key Fed data point, and July housing starts and existing home sales, also could also shed light on the Fed’s next move. In normal times, the U.S. dollar has been in such a pure float since 1973. But while the PBoC statement said that the devaluation was a “one-time correction”, the additional flexibility in setting the daily fix is expected to result in further weakening of the currency.
The renminbi falls somewhere in between. But this target rate is not rigid. “People have the China move last week still in the back of their minds…but our view is that (the Fed is)still on course to raise rates in September or October”.
Albert Edwards, head strategist at Societe Generale, is bullish on gold too, saying its current weakness creates the best buying opportunity since the 1970s, when the metal surged from $100 to more than $920. It traded within a tight range between 6.3915 and 6.3967. It was lots of bumps over the last few years: bad bank loans, a real estate bubble, a stock market bubble, and the ultimate crash of all of those markets.
“For years China has rigged the rules and played games with its currency”, Chuck Schumer, the senior Democratic senator from New York, said last week.
Investors, already concerned after a long period of weak economic data coming out of China, had feared that desperate officials in Beijing were prepared to force down the yuan’s value as the only way to turnaround the country’s fortunes. The unsayable truth, considered in this space years ago, is that American free-marketers doing business in China have been thoroughly invested in the Communist leadership’s command over the economy since Deng Xiaoping’s day. Last time I looked, intervening to encourage growth-in this case by supporting export industries with a weaker currency-was a good thing, not an occasion for markets to gyrate and politicians to erupt in protest.
But, like “discrimination” in the civil rights debate, “manipulation” of exchange rates is very much in the eye of the beholder.
Did the Fed “intend” to manipulate the value of the dollar in a way that would boost U.S. exports and retard demand for imports?
Market heavyweight Samsung Electronics tumbled 3.2 percent after announcing the global launch of the Samsung Galaxy S6 edge+ and Galaxy Note5 smartphone models, while chip giant SK Hynix lost 3.4 percent.
Therefore, PBOC’s action is meant to showcase its determination to push forward financial markets reforms.
But even the International Monetary Fund appears to be appreciative of China’s efforts to allow for and encourage greater use of its currency worldwide, both for trade and investment. Then what would critics like Donald Trump and Democratic Sen.
Residents in the Chinese port city of Tianjin are demanding compensation and accountability days after a chemical blast ripped through a warehouse, killing more than 100 people and injuring over 700 others. The recent experiences of Japan and the Euro Area confirm this link between currency depreciation and stock market performance.
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It came as no surprise recently to read that the Chinese yuan, or renminbi, as it is also widely known, is set to replace the Japanese yen to become the fourth worldwide currency within two years.
