2014-04-24

Offshore Yuan Sinks; Major Yuan Devaluation Looms

Offshore yuan price is leading the market lower as it did in 2012.


ADXY is 36.9% CNY. A drop below 114 would take out multi-year support.

ZeroHedge has a roundup of all the pain that begins should the yuan fall again tomorrow. Based on the current fixing, the yuan can sink as low as 6.28 if traders want to take it there.

The "Real Pain" Is About To Begin As Chinese Currency Slumps To 19-Month Lows

It closes with a quote from another yuan bear, Russell Napier of CLSA.

“Mercantilist alchemy transmutes China’s external surpluses into foreign exchange reserves and renminbi. But with capital outflows from China at record highs, those surpluses are only maintained due to its citizens’ foreign-currency borrowing. Bank-reserve and M2 growth are already near historical lows and are driving tighter monetary policy. This will lead to severe credit-quality issues and force the authorities to accept a credit crunch or opt for a major devaluation of the renminbi. They will do the latter; and despite five years of QE, the world will get deflation anyway.”

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