China Begins Puking Dollars

The argument made here has always been China will sell dollars to defend the yuan, not to end dollar hegemony. Yuan devaluation is part of the process of ending dollar hegemony because it will wipe out China's bad debts and launch a new investment cycle. This process is now beginning.

ZH: Yuantervention: PBOC Devalues The Yuan, Then Scramble To Support It In The Open Market
but that shortly before the market close, China's central bank intervened via "at least one major Chinese state-owned bank sold large amount of dollar shortly before market closed, prompting rapid gain in yuan, according to two traders at onshore banks" Bloomberg reported adding that at least one state bank continuously sold dollar until USD/CNY reached around 6.38.

Reuters: China c.bank under pressure to weaken yuan further -sources
China's move to devalue its currency reflects a growing clamour within government circles for a weaker yuan to help struggling exporters, ensuring the central bank remains under pressure to drag it down further in the months ahead, sources said.

The yuan has fallen almost 4 percent in two days since the central bank announced the devaluation on Tuesday, but sources involved in the policy-making process said powerful voices inside the government were pushing for it to go still lower.

Their comments, which offer a rare insight into the argument going on behind the scenes in Beijing, suggest there is pressure for an overall devaluation of almost 10 percent.
They will lose control. Global forex traders can see China has a few trillion dollars to defend the yuan. That doesn't mean you can't push the yuan lower, it means you can play this game over and over and over and over. Chinese citizens will get in the act as well. Watch the gold price in yuan. Stocks have done poorly and houses are no longer attractive as speculative investments. If gold prices start rising in yuan, Chinese investors will turn to the yellow metal. Chinese exporters will join the selling by holding their dollars overseas and exchanging them for CNH in Hong Kong at lower rates.

What you saw happen to gold prices in 2011, home prices from 2009-2014, and stock prices in the past year, is about to happen to the USD/CNY.

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