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Yuan falls to 11-year low

bloomberg.com

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Re: Yuan falls to 11-year low

#41

Post by seanmcdirmid »

gamblor956 wrote: post #40
mlyle wrote: post #18

Earlier quoted context omitted.

It's worth noting that China's capital controls provide some insulation against this problem-- though they obviously cannot work to compel ongoing outside investment.

China's currency controls actually made the problem worse--a lot of non-Chinese companies immediately backed off on Chinese investments (i.e., factories, etc.) as soon as the controls were introduced.

What do you mean? China has had currency controls for a very very long time. It doesn’t affect foreigners or foreign companies so much, they give us an easy out (we can exchange whatever we earn automatically).

Re: Yuan falls to 11-year low

#42

Post by jonathankoren »

I don't understand this link. It's a trading quote, with no text and an irrelevant embedded video.

A much better link would be something that talks about this close. For instance https://www.cbc.ca/news/business/chinese-yuan-falls-to-11-ye...

I'm still confused by the coverage, since it's trading at 7 CNY to 1 USD. That's still higher than the 52 week low. Also it's higher on the chart on the right which shows the 5 year closes. I'm very confused, since coverage doesn't jive with either chart.

Re: Yuan falls to 11-year low

#43

Post by chrisjc »

hourislate wrote: post #9

The Chinese are doing everything they can to make sure US tariffs don't affect US consumers. And discourage factory work to leave for other countries (Vietnam, Mexico, Taiwan, Thailand, etc).

Doesn't the increase in cost of supplying the money that Americans need to buy Chinese goods (buying TBonds) just offsetting making goods cheaper?

Re: Yuan falls to 11-year low

#44

Post by tuxpenguine »

My uneducated guess is that Yuan is still over valued. Based on the personal anecdotes around me, I can see that the government is trying everything to tighten the capital outflow. That's not the case for the reverse direction though.

Everyone in Beijing or Shanghai owning a small condo with 70 lease is literally sitting on a property of nominal value of millions of US dollars. How can that value be justified? People are willing to take even 15% discount to get that assets out of the country.

Re: Yuan falls to 11-year low

#45

Post by sremani »

tuxpenguine wrote: post #44

My uneducated guess is that Yuan is still over valued. Based on the personal anecdotes around me, I can see that the government is trying everything to tighten the capital outflow. That's not the case for the reverse direction though. Everyone in Beijing or Shanghai owning a small condo with 70 lease is literally sitting on a property of nominal value of millions of US dollars. How can that value be justified? People…

The magic of Chinese two step. There is a glut of Yuan in China while there is a scarcity outside.

All you have to do is take a look at their M3. PBOC is printing like no tomorrow, but cleverly puts a wall with they CNY-CNH shit.

Deep Throat says it should be 20 to 1 not 7 to 1.

Re: Yuan falls to 11-year low

#46

Post by ccarpenterg »

jonathankoren wrote: post #42

I don't understand this link. It's a trading quote, with no text and an irrelevant embedded video. A much better link would be something that talks about this close. For instance https://www.cbc.ca/news/business/chinese-yuan-falls-to-11-ye... I'm still confused by the coverage, since it's trading at 7 CNY to 1 USD. That's still higher than the 52 week low. Also it's higher on the chart on the right which shows the 5…

It's low in terms of the Yuan's purchase power vis a vis the US dollar.

So the Chinese need more Yuan to buy the same products/services from the US. And in contrast, Americans need less US dollars to buy the same products/services from China.

Re: Yuan falls to 11-year low

#47

Post by vkou »

sremani wrote: post #45
tuxpenguine wrote: post #44

My uneducated guess is that Yuan is still over valued. Based on the personal anecdotes around me, I can see that the government is trying everything to tighten the capital outflow. That's not the case for the reverse direction though. Everyone in Beijing or Shanghai owning a small condo with 70 lease is literally sitting on a property of nominal value of millions of US dollars. How can that value be justified? People…

The magic of Chinese two step. There is a glut of Yuan in China while there is a scarcity outside. All you have to do is take a look at their M3. PBOC is printing like no tomorrow, but cleverly puts a wall with they CNY-CNH shit. Deep Throat says it should be 20 to 1 not 7 to 1.

The purpose of this isn't to fuck with foreign economies, or to kill jobs in America, or any of that other nonesense.

The purpose of this is to serve as a tax on Chinese exporting companies. They get paid in USD, but they have to pay their suppliers and workers in Yuan. They are being robbed by their own government, because they are exchanging USD for Yuan at a disadvantageous rate.

I don't understand why people who don't live in China give two cares about their currency manipulation.

Re: Yuan falls to 11-year low

#48

Post by vkou »

hn_throwaway_99 wrote: post #17
vkou wrote: post #3

Earlier quoted context omitted.

The US government as a whole, if you combine Local, State, and Federal spending, is not running a huge deficit. It is, in fact, paying its debts down. You can quip about how sustainable this state of affairs is, but of the three, only federal debt is growing... And, if you look at inflation-adjusted metrics, that growth is very minor.

> And, if you look at inflation-adjusted metrics, that growth is very minor. Baloney. Take a look at a graph of US federal deficit as a percentage of GDP. In 2018 the deficit was 3.8% of GDP, in 2019 it's expected to be 5.1%. If those were the values during a recession, that would be understandable, but during what is supposed to be a "great, amazing" economy, those structurally high values is what scares people.

I'm not disagreeing that the US is going into too much debt in the current economic climate. The current administration is starving future ones of the tools that can be used to deal with a recession.

However, you'll notice that the debt/gdp ratio has been stable for the past 5 years, or so.

Re: Yuan falls to 11-year low

#49

Post by mdorazio »

Taniwha wrote: post #38
mdorazio wrote: post #19

Earlier quoted context omitted.

Cynically, this means the rest of the world is doing that much worse that the US, for all its issues, is seen as a safe haven for parking your money. Alternatively, there's more capital floating around than there are reasonably safe investment vehicles with better ROI than US treasuries.

I think the US continues to be buoyed by it's reserve currency status, if say oil started to be priced in euros the US might find itself with a currency like everyone else's and giant debts, the dollar would crash (which would be good for US exports)

The US gets a lot of flak for its high debt dollar amount, but realistically the more important metric is debt to GDP ratio, which is a decent indicator of a country's ability to sustain its debt. The US is somewhere around 105% currently, right around the same level as Belgium. For comparison, Japan is almost 250% - basically leveraged to its gills - but tends not to get the same level of bad press. The US should certainly be trying to lower that ratio, but we're still pretty far from Greece-level of crisis.

In actuality, if the US's reserve currency status went away it might be a good thing for our debt since the dollar value on forex would drop and exports would increase. It would also be easier for the US to inflate its way out of crisis in comparison to today.

Re: Yuan falls to 11-year low

#50

Post by ccccppppp »

nostromo wrote: post #28
joeyrideout wrote: post #15

Earlier quoted context omitted.

The ECB is negative and preparing to cut lower. BoJ is buying 90%+ of their own bond market. Emerging markets are blowing up routinely, most recently Argentina. Australia and Canada have their own issues. The U.S. isn't perfect but it's comparatively safe with a large military and reserve currency status with positive interest rates giving them room to react short term. (Edit: To be crystal clear, this relative safet…

The crazy thing is that the US is pricing its treasuries between Greece and Italy . In other words, the US could pay much less for debt if it wanted to. https://tradingeconomics.com/bonds No other developed country is paying anything near that amount. That is drawing a large inflow of capital into long-term treasuries, which in my view, is the true cause for the recent inversion.

Maybe they are afraid lower rates will inflate assets even more or cause another subprime bubble?
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