Friday, September 8, 2017

Devaluation of yuan continues

The devaluation of the yuan continues: Can China save the world economy?

Chinese central bank
It continues to weaken the yuan, and this
weakening of the official exchange rate is already
7 days in a row - by the way, is the most
lasting devaluation since 2012.
Falling yuan strongly
It supports overloaded debts
stock market. Shenzhen and ChiNext indexes
which will all react to growth
market, has already demonstrated very good
results. In addition, the dollar index
compared to Asian currencies,
It falls, and this puts pressure on the stock market.

But here in the real
Copper prices fell to a record economy
lows, and also reduced prices
nickel, zinc. Even the index container
traffic in China has dropped to minimum
marks. Does this have anything to do
value if the stock markets are rising?

Of course, as it turns out,
that all the predictions about the ongoing
devaluation in China come true. Long
it became clear that the country needs a weaker
Yuan, who in the last ten years
only strengthened. With a strong national currency
companies become much more difficult
to be competitive, and also
They lose their export advantage.

Government failed
make the economy more oriented
to the domestic consumer, so
I had to find ways to increase
export flows. Ten years ago, for
100 yuan you can get $ 12, and now
this would amount to more than $ 16. That is why
China struggled to keep the
peg the yuan to the dollar. the economy must be
was constructed so that its growth
by exports did not depend on the market
exchange rate. However, under US pressure
and other Western governments
in 2005, I had to let go of the yuan,
allowing it to trade freely in the
a narrow range against the dollar. scheme
such was even comfortable: Chinese
manufacturers sell products in the US and
They get paid for it dollars, and then, when
dollars back to China, exporting
convert them into yuan. But what to do
then those dollars? Chinese government
used to buy American government bonds.
And now all the action
People's Bank of China are not going to support
exports, and to eliminate the imbalances.
It seems that the regulator is too long held
the yuan stable, without giving him the opportunity to
free to react
in the global economy, which led to
"dollar deformation".

So, if all the
really what happens, then
financial system in China feels
much worse than it looks from the outside. And
if the central bank will not be able
achieved with the help of its devaluation,
the whole world is waiting for hard times,
because everyone will understand: China is no longer
perform "savior" of the world economy. Today the pair USD / CNY sharply
I grew up in the morning - at the level of 6,359 to 6.368.

Most likely, therefore,
China and the People's Bank continues
devalue the yuan, although in the summer and
He said that it was only "single
stock". China is just trying to save
its economy.

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