RSS feedYuan
’Albert Edwards: Hold on for a hard landing in China
What are chances of a soft landing for the Chinese economy? Pretty slim if you ask über bear Albert Edwards.
The Société Générale strategist reckons “blind faith” in the competence of the Chinese authorities to guide the economy to a soft landing is misguided.
CNH centre: coming to a City near you?
We knew that China’s efforts to internationalise the RMB were moving along nicely, but thus far CNH deposits (yuan held offshore in Hong Kong) are still a relatively small part of China’s total deposit base.
China’s yuan-child policy, relaxed
Relax, kids: a demographic tidbit from Citi’s emerging market round-up on Monday:
China will relax the one-child policy in five provinces this year and probably switch to the two-child policy within five years.
Offshore adventures in Chinese property
With bank credit being tightened across the country it seems clear that China’s property developers increasingly desire to fund via the bond markets.
Some, though, have been increasing bond sales more than others.
Richard Koo goes unconventional on China
Nomura’s Richard Koo — he of ‘balance sheet recession’ fame — has been inspired.
He’s spent a week with Chi Hung Kwan, of the Nomura Institute of Capital Markets Research and an all-around China expert,
China’s yuan-child policy
Surely it was hard enough being a Chinese man without being held responsible for a global currency war.
This is, roughly, the usual US-China currency war logic: (1) Chinese officials intervene aggressively in the currency market,
What the China risk is
There’s been a bit of (somewhat post hoc?) concern in recent days over the cash crunch in Chinese interbank markets.
The one-week Shanghai Interbank Offered Rate went up, up… and then came down. Same stuff in the seven-day repo rate,
One country, two systems, three currencies (and four curves)
Where’s that?
China, of course.
With news out on Friday that Chinese monetary authorities are preparing the ground for a significant shift towards ‘prudent’ rather than loose monetary policy — all eyes are again on the renminbi market.
A cash crunch in China
Newswires are reporting that China’s finance ministry failed to attract enough demand for a bill sale on Friday — the first time this has happened since June.
This is important since the failure could indicate a shortage of cash at banks following the lifting of reserve requirements twice in this month.
Chinese bond gyrations
This is the benchmark Chinese seven-day repo market rate (chart via Reuters):
As can be seen, it’s on the rise again.
As Reuters noted on Tuesday the jump to near 2.2 per cent is, if anything,
Burning through the yuan and asking for more
If you’re a China-based bank you might have received this in your inbox on Thursday — from the Hong Kong Monetary Authority (HKMA):
——–
(i) “Until further notice, Participating Authorized Institutions
China’s little problem with unspent cash
There’s a bit of an interesting situation developing in Chinese public finance.
According to analysts at Standard Chartered, based on current trends, the government’s revenues could fall short of expenditures by only CNY300-500bn,
China does a forex whoopsie
From Reuters on Thursday:
Yuan ends up after fixing error raises appreciation view
* China FX system inputs incorrect mid-point before mkt open
* Corrected to 6.6695 from 6.6495 in several minutes
* Pause in yuan appreciation expected over next few days
* Yuan seen resuming rise to around 6.6 by late Nov
* Yuan at 6.6504 vs dollar,
The renminbi’s release is speeding up
Now here’s a renminbi mystery.
Not only did the People’s Bank of China fix the USDCNY cross-rate lower for the eighth time running on Monday at 6.7110, versus Friday’s 6.7172 — the longest run of low fixes since October 2007.
Yuan-ted: McDonald’s new bond
Two global titans — one of fast food and one of the world economy — have teamed up in the debt market. For, McDonalds has become the first foreign corporate to issue a renminbi-denominated bond.
The Thursday press release from offer manager Standard Chartered:
Chinese floating exchange rate? There’s an ETF for that
Call the global ETF industry what you want, but you can’t deny that they’re not quick to react to changing investor demands.
Not even a week since news broke that China would consider some flexibility in its exchange rate,
Renminbi variations
So China moves to flexibility in the renminbi, presenting a token diplomatic gesture before G20 talks, but ultimately not changing very much economically. Right?
Well, sort of. The situation is more complex than that.
Renminbi reservations
The knee-jerk reaction in currency markets after China’s big renminbi announcement:
But if most of the media agrees that China’s decision to enhance the yuan’s flexibility was a step in the right direction,
Renminbi ruminations
Some critics are doubtful about the significance of Beijing’s moves but the volumes devoted to China’s weekend statement on currency flexibility on Monday morning would suggest otherwise.
As the FT reports,
A Chinese trade deficit? ‘Tis but a flesh wound
Waiting for China’s long-awaited, long-controversial decision on the renminbi’s value is getting to be like waiting for Godot.
Oh, well. Here’s an interesting $7.24bn-sized diversion to ponder while we wait: how to interpret the trade deficit China has now posted for March,
China shows some appreciation, soon. How soon?
Oh, can’t we have renminbi revaluation before the weekend, China? Please?
Reuters reports that forwards on the RMB deflated a bit on Friday. Seems traders found a Thursday NYT piece, which declared a rise “very close”
Cuckoo clocks and chopsticks at dawn
The Swiss franc reached a record against the euro on Tuesday — and that’s despite a recent pledge by the country’s central bank that it would help counter “excessive appreciation” in the currency.
What is a ‘basically stable’ renminbi?
The superior man is modest in his speech, but exceeds in his actions.
- Confucius, The Analects, Chapter IV
China’s leaders have long been known for their pragmatically gnomic political sayings.
Renminbi revaluation: it’s a world war out there
…To judge from the international institutions which were shoved into the fray over RMB appreciation on Wednesday, including the World Bank and UNCTAD. At least it means the debate is now getting to the broader problem — imbalances.
China as currency manipulator: reality check, please
Ah, Yuan revaluation worriers: name-calling won’t win the argument for you. But sage advice from a certain investment bank just might.
Monday brought the sound and fury of a letter from 130 U.S. Representatives to the Treasury demanding that it brand China as a ‘currency manipulator’.
Renminbi rumours
The Chinese-currency rumour mill is “churning overtime” traders noted on Friday, as forward renminbi contracts headed towards their biggest weekly gain in two months.
Citi traders said on Friday morning that much speculation about a weekend (upwards) revaluation of the reniminbi brought more heavy selling interest.
Releasing the renminbi for Asia
Nomura has an ambitious big-think analysis paper out on getting Asia’s strident recovery through the medium term, particularly via capital markets reform. Check the Long Room for the full report, by John Lllewellyn and Lavinia Santovetti.
Deep 2010 downturn could yet trigger trade war and yuan devaluation
The perfect riposte to Monday’s equity market rally has arrived: the latest Global Strategy Weekly from Soc Gen’s Albert Edwards.
And while the headline rather gives things away, here are some selected highlights for all the bears out there.
Chinese yuan appreciation pressure mounts
Chinese industrial output in October accelerated at its fastest rate in seven months, according to figures released on Wednesday.
Analysts are now cautioning that sort of rebound will only heighten pressure on China to appreciate its currency versus the US dollar as exports rebound and domestic focus once again is forced to turn to inflation.
The real money supply, globally
By which we mean the folding stuff (and coins) issued in 137 countries. Compound annual growth in the real money supply since 1971 is 9.09 per cent, according to Dollardaze.org, where Mike Hewitt has been crunching the numbers: