Why is the China RMB suddenly falling sharply

What happened? The rapid devaluation of the RMB

Yesterday, the exchange rate market appeared obvious fluctuations, offshore yuan trading time fell below 7.15,7.16,7.17 points, the evening decline further expanded,7.18 and 7.19 were also broken, the highest depreciation within the day of 500 basis points. 7.19 This position, basically the lowest in recent years, before the appreciation of the yuan from 8 to 6, and then from 6 now devalued to 7.19, the yuan has been a roller coaster ride in the past decade.

 So why is the rapid depreciation of the RMB?

First of all, we do not set growth targets this year, which has an impact on confidence in international capital, and it is normal for the economy to depreciate its bad exchange rate.

 Second, the growing voice of external disharmony, which makes imports and exports also increased obvious uncertainty, the continued surplus is conducive to currency stability, if the basis of the surplus does not exist, then the value of the currency will also fluctuate.

 Third, the issuance of special treasury bonds, government debt will certainly rise sharply this year, coupled with the central bank's continued easing, and the possibility of a cut in interest rates in the future will reduce the value of the local currency.

 Fourth, strong U.S. stock markets, a restart of the economy, and persistent deflationary pressures have not eased, leaving capital still in demand for safe havens, so the reverse flow of global capital is not conducive to the stability of the renminbi.

 Fifth, we may also subjectively intend to let him depreciate, depreciation will be more conducive to exports. which is beneficial for us to digest domestic stock. Stable economy.

 So, all countries are playing games now, and the exchange rate is an important game, but Lao Qi believes that the RMB is a little undervalued now, because although we are loose, but the speed of printing money, obviously still can not compare with the United States, so there may be a lot of uncertainty in the short term, but in the medium and long term, at least the RMB against the dollar is undervalued. Nor can we let the yuan depreciate forever. Because a continued devaluation would do so much harm.

 First, the continued depreciation of the renminbi will accelerate the withdrawal of foreign capital and drain foreign exchange reserves. Foreign exchange is the central bank's assets, foreign exchange decline, the central bank's balance sheet is bound to shrink. will also affect domestic monetary policy.

 Secondly, depreciation is not conducive to asset prices, we have said before, the rapid depreciation of the RMB process must be the stock market down, indicating that funds are going out, market funds are reduced, will certainly fall. The same is true of the bond market, capital decline must be interest rates rise, prices fall, so the market bond market pain is inevitable. Moreover, higher interest rates are not conducive to economic recovery. The outflow will also put pressure on the housing market.

Third, the depreciation is too large, the status of RMB internationalization will have a huge impact, you are now a reserve currency, can not easily fluctuate so much. Otherwise, people lose faith in you, they don't need you.

 Fourth, although it is good for exports, it is not good for imports, and depreciation means that we will purchase raw materials more expensive. And many of our manufacturing are processing materials, the beginning to go to inventory when very cool, but wait until to fill the inventory, found carrying side sink.

 Fifth, the depreciation of the RMB is also greatly unfavorable to the wealth of the people and studying abroad, traveling, and purchasing overseas will all be affected.

 Exchange rate issue is very sensitive to each of our foreign trade plastic injection companies, share to you, hope to help you.

RMB and US dollar showdown

2015. 12.3 night, a trillion dollar profit levels of the Holocaust occurred.

The people expected of the Holocaust

  The European Central Bank cut interest rates evening, as well as many economic scholars including Chinese big reversal for the dollar, the devaluation of the yuan long advocated, more real space next to those of the US capital predators, sent a huge brainless opponents dish, because there You do not have to spend money to lure more.

      The dollar index, rose and then fell, from a high of 100.47, plummeted to a little over 97, down 2.2%. Created since March 2009, which is the biggest decline in almost six years. Was the outbreak of the subprime crisis, the dollar index single-day decline of 2.9%. Even worse is that this crash, after the ECB cut interest rates, we would have expected, the dollar would like to take this opportunity to create recovery highs yet again.

Why is there such a result seems inconsistent with the logic of it?

 Logic never wrong, the wrong people

  In fact, it never appears opposite logic with real financial logic, if that trend and as expected, can only be predicted logically wrong. The dollar index is down not up, the logic behind it is that I have been talking about, the dollar index is currently only rebound, but the rebound high point, the Fed announced the rate hike will really come when the dollar index is likely in 103 about the location, and build a double top.

  Therefore, if the December Fed rate hike, the dollar index likely to turn down. Now, the euro announced interest rate cuts, the effect and the Fed announced the rate hike is about the same, capital predators have seized this opportunity, when everyone thought the dollar should continue to rally, effortlessly find a big rival short wave plate, which It is a hearty, lucrative funds massacre last night incident, at least at the scale of its earnings more than one trillion US dollars.

After the weak dollar, the RMB yuan will be okay?

       Just past the renminbi incorporate SDR, it is actually happening behind an emperor to abdicate drama. US dollar share in the SDR is almost intact, 10.9 percent of China, mainly the euro, pound and yen let out. How to look like the dollar a few little brother, try to turn the yuan pull into same, of course, one of the most active is the euro and the pound.

        RMB added SDR, slow decline accelerated dollar hegemony, the United States is no way this point, in the period of review which has been talked about, because, if the United States allowed China to get involved, then China can only start all over again, IMF may end a mere figurehead. US may eventually have to play mahjong, instead of playing their own good at the bridge. More importantly, China included is the people, the general trend, the United States did not dare to go against the trend, otherwise people are lost.

       RMB join the international influence of SDR, it is more than expected, at least beyond American expectations. Because, after nearly 10 countries represented, to incorporate the renminbi foreign exchange reserves, increased investment in RMB assets. This psychological expectations very terrible, because it will greatly affect the current US strong dollar strategy.

    Strong dollar strategy, whose aim is to create the illusion of the American economy thriving in the world, the temptation for more capital to the United States then set high assets, thereby to complete the field in a large universe diversion of global capital, while the US capital at the universe after the big diversion, go to the whole world to acquire cheap assets. This strategy has become the United States from the subprime crisis turned completely, the only possible solution.


        But the hope that, with inclusion of the RMB SDR increasingly slim. So also, we see the US media out disinfection, said the yuan included in SDR, it will not have any immediate impact, but does not affect the status of the dollar in the world. Former Federal Reserve Chairman Ben Bernanke, also personally photographed, said the yuan included in the SDR, simply do nothing, which is equivalent to the Chinese made a small red flower it, we should not be all wrong.

  Butterfly wings have been instigated, and then it was too late to remedy. The dollar plunged last night, not just against the dollar this should not have time to correct abnormal strong, but also the host of the RMB capital market once Zhuanghang.

Strong dollar strategy or failure in advance

 In the review of 25 November, when I have talked about, Chinese Manniu opening, the biggest problem is the Fed's strategy of a strong dollar, because it greatly hampered the US-led strategic capital outflow China. "The Fed wanted to wait for the Chinese economy signals a further deterioration, especially after the stock market crash, China was a substantial outflow of capital, the rapid devaluation of the renminbi is expected to enlarge, once concerns about China's economic influence throughout the world, the US media in the calculation outside China Chu also top a few months, but fortunately, China stabilized now, China Manniu reopened, which gave the best weapon against the strong dollar China strategy. "

  Of course, my view is not mainstream, most Chinese scholars, are still forecast in the next few years the dollar bull market, and that the yuan to a large devaluation of house prices to drop. Some Americans even more than they are optimistic about the US economy.

In fact, when the global so generally optimistic about the time an asset, which in itself is a huge risk. Especially promising is the Fed deliberately misled come a time when the common good, hides a huge massacre future assets. China's rich past few years has been for the US real estate market, sent at least $ 350 billion in cash support, has almost the same, it may be necessary to go bargain-hunting quilt.

  Dollar plunged last night, did not see the Chinese media have too much coverage. Occasionally there are a few, but also "the dollar's slide," with the word. 2.2 percent, the biggest decline in six years, with the decline seen to have lost the basic objective.

 However, no one can stop the tide of history, the Fed and the White House, the fantasy of this to finance big showdown to complete the subprime crisis completely turned around, complete re-parasitic ambition dollar hegemony, and probably will soon become Bubbles.

   The above article not my orininal, Cnmoulding is a China mold maker , hope brought to share, as a plastic injection molding manufacturer in Shanghai, I still firmly believe that a big currency issue, at least if I choose to I want to hold dollars instead of the continuous depreciation of the yuan.