December 2, 2008
Renminbi Devaluation Underway
Yuan Falls Most Since End of Currency Link Before Paulson Visit
“The currency declined 0.7 percent after the People’s Bank of China set the daily reference rate at the weakest level since August, prompting speculation policy makers favor a depreciating currency to spur demand for Chinese goods.”
China is looking out for Number One.
As you can see from the spread chart below, the non-deliverable forwards shifted in late September, so the market has been expecting this policy change for a good long while now.
Cat: | Time: 9:28 am (utc+8)
December 2nd, 2008 at 11:55 am
Do you still keep your money in yuans?
The export depended Japanese economy also would benefit greatly from yen’s depreciation, but their bank doesn’t have much room to go lower, so basically they are screwed. I see severe weaknesses in all currencies around the world. Everyone wants to depreciate. It is time to take a good long look at the gold.
December 2nd, 2008 at 12:09 pm
@ivanhoff: Yes, I still earn RMB (until given the heave-ho) and my expenses are in RMB and an awful lot of savings/investment I’ve done is in RMB, so I keep a close watch on the currency market. Competitive devaluation is a dangerous game, and yes, for what it’s worth, my “system” has been long GLD (and SLV) for awhile now but has only produced losses to date.
December 2nd, 2008 at 9:35 pm
“Competitive devaluation is a dangerous game”, right. Too many peope has been long Gld.
We will see if pepope going too sell again on RMB/CHF or not.. bye
December 3rd, 2008 at 1:26 pm
Competitive devaluation is a dangerous game, but economics in China needs Renminbi devaluation, right? If so, it is the problem. I’m afraid of capital flight out of China.
December 3rd, 2008 at 2:21 pm
@ZAR: Beggaring thy neighbor is never good, is it? (neither is buggering him) … I’m not sure about capital flight yet. If we lose our jobs or if the social situation becomes completely unstable, then we’ll flee, but not before.
December 3rd, 2008 at 4:16 pm
I’m afraid of capital flight out of USA/Europe (more).
December 3rd, 2008 at 10:40 pm
@Luca: Flying where though? It has to touch down somewhere.