Why Did China Announce Its Gold Reserves? Yuan Depreciation Pressure

China did as I expected. They waited until the currency was under serious depreciation threat to announce their gold reserves.

ZH: China Increases Gold Holdings By 57% "In One Month" In First Official Update Since 2009
Well, the long awaited moment has finally arrived and this morning, after a 6 year delay when, China finally admitted that it had been misrepresenting its gold holdings for a very long time, when it announced that its gold holdings had increased from 38.89 million to 53.31 million troy ounces, a 57% increase "in one month."
I doubt this is the whole amount, but it is the official number for now.

Here's the 12-month change in forex reserves against the 12-month change in CNY/USD. Notice a pattern? This is one big reason why I've expected yuan depreciation the past few years: it happens every time when forex reserve growth drops and it would've happened in 2008 of China hadn't re-pegged to USD.

I've written on yuan depreciation for several years. Some posts:

PBOC Propping Up Yuan Ahead of SDR Inclusion.
China May Pay A High Price For SDR Push
The Informational Power of the Offshore Yuan Exchange Rate

The U.S. Dollar Index is moving higher. The euro fell on the Greek parliament's vote and the German parliament's vote for a new deal, but the details won't be known for maybe a month. Greece can still be kicked out of the euro if the talks fail. If talks don't fail, the euro probably heads lower as the true cost of the bailout becomes known. If the euro breaks the March lows, it's on to parity and beyond. The Canadian dollar broke lower versus the dollar with the Canadian central bank's surprise cut this week; it is at a major resistance level. The Australian dollar is at a new post-2009 low. Emerging market currencies are near their 5 year lows and the Asian Dollar Index is on the verge of breaking down.

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