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There are strong expectations on tax cuts in the U.S. markets. On the other hand, the chance of a Fed rate hike in March seems limited, which is also helping shares.
With $3 trillion viewed by some as an important threshold, this decline will likely spark renewed debate over how long the People's Bank can continue intervening to support the renminbi. Our view is that the PBOC can afford to keep selling FX (foreign exchange) at the current pace for a long time.
If you have a weaker currency, things that are more exogenous to just the politics of exchange rates begin to work a bit more in favour of (certain outcomes), for example capital flows out of China, which is really what's putting a lot of pressure on the yuan over the last year or so.
"China's bond market is exciting and dynamic as China accelerates the internationalisation of RMB,"
China's bond market is exciting and dynamic as China accelerates the internationalization of RMB.
With FX reserves below US$3 trillion, we can expect capital controls as well as tightening yuan liquidity to continue, as the authorities try to avoid a further drawdown.
Risk premia should remain elevated as the market grapples with U.S. policies, with Asia in particular risk from protectionism. Beijing's ultimate goal is to let the (yuan) reach a market clearing price sooner rather than later, albeit without a major one-off devaluation during the process. This is already challenging enough and now the potential policy mix from the Trump administration has further complicated the task.
A rising dollar and an unrelenting desire for FX diversification by local residents means more (yuan) depreciation pressure.
The signal is very clear. Inflation at that time was rising very rapidly and at this time inflation is not really an issue. Secondly, the yuan was under pressure to appreciate at that time.
The slide in the renminbi that we saw last year has reversed in January - the local authorities want to provide more support for the currency against the dollar or other currencies they have trade flows with. In the long term (FX purchases) is a respectable goal that will add to Russia's strength and give the government some additional budget discipline. But at the same time it will help weaken the currency, smooth volatility, and reduce the correlation between the dollar/rouble exchange rate and oil prices.
"The Chinese government also doesn't want to see more yuan outflows, as they could be quickly converted into dollars and in return increase pressure on the exchange rate,"
Yuan internationalisation will continue to benefit from major financial infrastructure milestones, such as the Cross-Border Interbank Payment System and additional yuan offshore clearing centres.
Overseas merchandise buyers became reluctant to accept yuan against the backdrop of yuan depreciation. The Chinese government also doesn't want to see more yuan outflows, as they could be quickly converted into dollars and in return increase pressure on the exchange rate. Exchange rate stabilisation has overriden yuan internalisation to be the major task [of the People's Bank of China], at least for 2017.
These filings by Apple's Chinese subsidiary are just part of Apple's efforts to find ways to pay less for Qualcomm's technology. Apple was offered terms consistent with terms accepted by more than one hundred other Chinese companies and refused to even consider them. These terms were consistent with our NDRC [National Development and Reform Commission]Rectification plan. Qualcomm is prepared to defend its business model anywhere in the world. We are proud of our history of contributing our inventions to the development and success of the mobile communications ecosystem.
Low interbank yields don't reflect real borrowing costs in the real economy and have to trend higher, otherwise easy funding would only be used by financial institutions to make speculative arbitrage. Meanwhile, yuan depreciation pressure also puts upward pressure on Chinese yields.
The good thing is each of us get around 6,000-9,000 yuan in extra bonus this year.
Today's move seems to suggest that liquidity conditions are tighter than authorities' expectations, as capital outflows remain strong. But in the meantime, an outright easing will add pressure on the yuan exchange rate as well. That could be the reason behind today's strange move, and till now the central bank has not yet verified this piece of news.
Floatation does not mean a large devaluation.
Actually, a one-off devaluation [of the yuan] doesn't need to be big, and [the currency] may rebound as well. By doing this it will help the domestic economy.
Forex reserves are valuable assets that [China] can use at critical times. It's a pity that they are being sold heavily in the market. It should be the last resort.
It would be a surprise – and at odds with supply side structural reform – if most of the seasonal increase were not withdrawn in the three weeks following the week-long holiday.
Today's move seems to suggest that liquidity conditions are tighter than authorities' expectations, as capital outflows remain strong. But in the meantime, an outright easing will add pressure on the yuan exchange rate as well. That could be the reason behind today's strange move.
Selling Treasurys will temporarily boost CNY [the yuan] versus the U.S. dollar and that might please sentiment directly.
I even told our employees don't use that word at all – it doesn't matter.
Even if you're a unicorn for many years, if customers don't like your product, very soon you become nothing.
The PBOC's injection is not enough.
In terms of Trump and the impact on emerging markets, the market is still trying to figure out what will happen. There are still a few more days before he is sworn in. China is a big player and Trump's rhetoric so far has been quite aggressive against China. Currencies are bouncing back and forth, and the renminbi is not immune from these fluctuations.
China has no intention to boost its trade competitiveness by devaluing the renminbi, still less will it launch a currency war.
Our trading system is very important to our economy.
One of the things the candidate said he would do was label China a currency manipulator, which means that China is keeping its currency artificially low in order get an advantage in exports. Of course, China right now is working very hard to keep the renminbi from falling. So it's a little bit inconsistent.
It is a dangerous thing to try to interfere too much with our trade and I'm hopeful that this will be a very cautious process.
I think what we're going to see is a lot of internal dissension, where different points of view are fighting it out within the administration and the president is sort of broadcasting to the public what he's thinking in the moment. So there's a lot of uncertainty.
That case is weaker now because we're closer to full employment. There is still a case for fiscal policy but it's less in terms of large of amounts of spending and more in terms of smarter policy.
There may be no good options with the yuan. Slowing the decline can be costly. Allowing the full decline would be disruptive.
If they step away from the intervention to support the yuan and let it fall, it would likely spur a speculative attack.
All they wanted to do is to create some uncertainty and to make sure that investors don't think the yuan is a one-way street.
A lot of hedge funds do fund themselves overnight, but most people are in the three-month plus area, and it doesn't affect them. Spot movement is spot movement, and you aren't forced to do anything.
The long-dollar trade was a consensus trade by real money and by global macro funds, so it wasn't a huge leveraged play on yuan weakness.
The June update... was prior to changing views on where the renminbi would be, and China's GDP has slowed, so all we are saying is the redeployment will take longer.
Over the year, our base case is for the yuan to decline against the U.S. dollar by a mid- to high-single-digit percentage. However, we also think the possibility that the PBOC will allow the yuan to float freely, or at least widen its trading band, has increased.
I only considered BYD and BAIC. I definitely can't afford the 300,000-600,000 yuan price of a luxury-style Tesla or prDenza.
A more protectionist tilt in U.S. trade policy could trigger a trade war. This in turn could result in bigger-than-expected renminbi depreciation.
But the market doesn't see it that way. A break of $3 trillion will lead to a picked up pace of capital outflows and the PBOC has to manage that situation.
The onshore investor community is heavily long fixed income and the interbank community has deployed quite a bit of leverage in expanding their balance sheets. For them to either tighten monetary policy explicitly or tighten onshore liquidity conditions through either onshore or offshore liquidity measures in the interest rate and foreign exchange markets will have a significant impact on investor liquidity onshore.
Getting capital out of the country has frankly become much more difficult. They're working very hard to make sure that is done in a way that is according to the rules and regulations. This whole program or agenda of the internationalization of renminbi takes a step backwards and we know that is a major part of their policy agenda and a major part of their reform agenda.
We've started the year with some fireworks in the currency. We've seen a meaningful decline in reserves over the last two years, largely as a function of FX intervention. If they continue to intervene in the FX markets, they will categorically take the FX reserve number through $3 trillion.
It's an open question how much (the Chinese currency) will have to drop before market pressure dissipates but it is probably closer to that point today than it was a year ago.
The drama being played out in the currency market reads like a Hollywood script.
The dollar was still on track to rise this year and its influence on the Hong Kong market is not over yet. The sharp rise in offshore yuan last week gave the stock market an excuse to rise, but the overall influence isn't a lot in the long term.
Capital outflow will be a multi-year process as private investors build holdings of offshore assets. This in and of itself should not be feared. But it will in the medium-term keep depreciation pressure on the yuan.
Despite some semblance of order emerging, we should expect volatility to remain high. Underlying yuan depreciation pressures should return as fundamental reasons that are driving depreciation, such as capital outflows and concerns on Trump's China policies, haven't changed.
The [U.S.] central bank is talking about the possibility of tightening further because of Trump's fiscal plan but at the same time, there is some cautiousness in the minutes about what kind of plan he will be able to pass. The market has retained this pinch of salt as regards the outlook: There are too many uncertainties to draw a strong conclusion at this point.
The yuan was a key catalyst that bears watching but it is not the only factor. There were large amounts of dollar long positions, particularly against the euro and yen, that found an opportunity to be unwound.
Bond investors are quite concerned about their holdings in Turkey ... People are questioning whether the central bank will have the independence to fight the rise in inflation.
The developments we have seen in the offshore money market are a sign of the authorities trying to make it more expensive to short the offshore yuan. It seems like they are squeezing out the shorts and they are succeeding with that.
If something goes up very rapidly ... people make a lot of money, and at some point they're going to want to sell, in order to realise their gains.
These moves caused a massive spike in (offshore yuan) and (onshore yuan) funding costs, which has led to a liquidation of long dollar/off-shore yuan and dollar/on-shore yuan positions.
The Trump bears kept quiet in December because there was no point in fighting the battle then. They seem to be emerging now. It is not just against the yuan. It looks to me highly suspicious that dollar can't get below $1.0375 (per euro).
This isn't economics. China desperately doesn't want a repeat of what happened this time last year (and it seems) attack is the best part of defense.
"Chinese officials have few policy options,". "If they allow faster depreciation, this will only spur pressures for greater outflows. And a one-off devaluation risks a repeat of the market turbulence evidenced twice in the past 18 months".
"It doesn't matter if there's actually enough reserves or not,"
It doesn't matter if there are actually enough reserves or not.
There has been quite a bit of anxiety and speculation because the way many people in China talk about it is 'will the government defend the 7-per-dollar level or the 3 trillion dollar.
Previously, capital controls had been relatively loose and authorities had turned a blind eye to individual forex purchases because of abundant foreign exchange reserves. But they are now strengthening supervision in order to change expectations.
Chinese officials have few policy options. If they allow faster depreciation, this will only spur pressures for greater outflows. And a one-off devaluation risks a repeat of the market turbulence evidenced twice in the past 18 months.
Some people say the 'Trump rally' has come to an end already. Others say the real rally will begin after he takes office. It's not clear what the market's next theme will be.
Short-term interest rate is too high now, with overnight borrowing cost of the yuan surpassing 40 per cent. If yuan short sellers do not square their positions, they will see losses immediately as the funding cost is really high.
I think what we're talking about here is a renminbi which weakens in line with other currencies. There's no harm in that. I don't think Beijing will try and resist that. The capital account is relatively poor. China still has enough reserves to prevent the renminbi from crashing.
I think it is not of huge significance to the market, because it does not convey the full picture of Chinese authorities' intervention in the foreign-exchange market. This is partial information and it has become a less important market driver. The market does not move on this number much anymore.
Given that the yuan's weakness over recent months seemed to correlate with bitcoin's strength more than any other currency, it's no surprise that bitcoin traders have reacted the way they have to the yuan's sudden strength today.
Once we broke through the nominal all-time high, liquidity dried up - no shorts, no sellers, which means a volatile little bubble formed quickly. We are seeing the effects of that now as it breaks. It's still fairly thin trading volume though, so who really knows where it goes next.
Recent economic data is pretty good so markets are in risk-on mode overall and the dollar is supported. But U.S. bond yields are being capped so the dollar is losing the driver behind its rally.
The depreciation expectation of the yuan remains and it takes time for investors to rebuild their confidence in the Chinese currency. Meanwhile, China has been making efforts to control capital outflows.
Trump's actual policy delivery and his stance against China are critical to the dollar and yuan direction in 2017. While China-U.S. tensions have been heating up in December, any provocation from Trump's administration after he takes office will easily escalate the risk of a trade war and spark a heavy CNH sell-off.
The dwindling offshore yuan pool and controls on capital outflows have led to the elevated Hibor rates recently.
The movement yesterday was not triggered by an outright intervention from PBOC. Alternatively, it is more like a knee-jerk reaction as there were massive stop-loss flows in the market. These wild movements of USD-CNH indicate that the market will remain volatile in the short term, but won't change the fact that yuan is under pressure to weaken.
You can't buy real estate. You can't purchase anything. Basically you can only park that FX in your deposit account onshore with interest rates that are very low.
In the past two years, depreciation pressure on the yuan has been high, but (China) hasn't changed foreign exchange management rules. If you change the rules now, there will be market panic. To stabilize the forex rate, you need to strongly emphasize to everyone, I won't change (the rules).
You don't usually think of China being in that pocket of vulnerability.
Being bullish on the dollar as we are, we see the renminbi continuing to weaken next year. We are at 6.90 (yuan per dollar) now. If you look at the 3-month forward it says (we will reach) 7.0. So something closer to 7.25 next year is not unreasonable.
We closed our short position in Chinese yuan recently. I don't think in any single year the currency can go so far when the current account surplus is still there.
There's not the same euphoria as there was in January. So many people got their fingers burnt and they have clearly been trying to engineer a December calm. For us it is a reasonable opportunity. A slow and gradual depreciation. It's a simple dollar bull trade, played through offshore forwards.
It's a priority project now.
The best strategy is to let the yuan fall in full, and the worst strategy is slowly depleting foreign exchange reserves.
The Chinese authorities are too indecisive about the exchange rate policy.
The fear of the yuan's depreciation has become a burden for us.
The pressure on yuan to fall is short-term ... from the Fed rate rise and Donald Trump's potential expansionary fiscal policy. China's economic fundamentals indicate that the yuan should appreciate in the long run ... it's unnecessary to cause market volatility because it could hurt confidence in the Chinese economy and the yuan's global ambition.
The Singapore dollar is a basket, which is tied to the yen, the renminbi and the dollar, whereas Indonesia is a very commodity intensive economy. If commodity prices are stable or stronger, then essentially that supports the Indonesian economy. The Singapore dollar is tied much more to the basket and therefore will continue to weaken.
When the market condition becomes stable, the capital flow will be back to normal.
Regulators have a lot of control over what happens to those deposits, and they can control the rate of inflows into onshore FX deposits.
Expectations of capital flight are clear. I might exchange more yuan early next year, as long as I've got money.
Everyone's following the trend.
China has been selling dollars to keep the yuan steady while Japan is very happy to let the yen depreciate.
China has been consciously cutting its holdings of U.S. Treasuries, to defend the yuan, and it's hard to stop this trend.
Bank of China has strong liquidity in renminbi and its local presence and knowledge offer us additional benefits in the rapidly developing Chinese financial markets. Having local funding arrangements is a natural extension of our activities in China.
We see great opportunities in developing more renminbi (RMB) products and tapping into China's debt capital markets on behalf of New Zealand financial institutions and government agencies.
The question people are looking at is whether they are concerned about the dollar, and if they say the dollar appreciation presents medium-term risks we will have to wonder if one-to-two rate hikes next year make sense. The risk-reward of long dollar positions looks poor ... it's all baked into the cake.
It's a seasonal effect. Coming into January we will see fairly large capital outflows and if you look in the past two months, reserve drawdowns have been very significant ... so we could well come into January-February with reserves under $3 trillion.
Alternative assets like bitcoin do well when the world is unstable. It looks like the world is getting a lot more unstable.
What we have and in the last four months is consistent week over week growth. This quarter, our consumer business will almost double.
It's neither necessary not likely to raise interest rates at the present, given that the economy has just stabilised and liquidity may get tight towards the year-end.
It will definitely take place, but I don't have information about whether it will be a deal or non-deal roadshow.
The market is more fixated on an unfiltered pricing 'glitch,' which shows how incredibly sensitive the market watcher is to potential spill-over effects of Trumpenomics. Question the validity of the online prices, in particular through non-transactional resellers of currency data.
China's capital outflows are worse than they appear, which is why the government has allowed the RMB to depreciate over the last two months. We believe this pressure will continue with the prospect for higher interest rates in the U.S.
Depreciation triggers capital flight, and capital flight exerts even bigger pressure on the yuan. Therefore, it's necessary to break this feedback loop.
Some brands price their products in China closer to the overseas markets, such as Chanel. If there's only a few thousand yuan difference, I would just buy it at home.
Yuan devaluation has encouraged outflows from the mainland and that could heighten volatility in Hong Kong.
The stress could continue for a while. Whether the situation gets better depends on the willingness of the central bank to inject more liquidity into the system.
Previously, only forex transfers worth USD50 million or more needed to be reported to SAFE. Now, the threshold has been drastically lowered to USD5 million, and covers both foreign currency and yuan. All we can do is to ask clients to be patient, and tell them that the transaction is being vetted by SAFE for authenticity and may not be approved.
At the moment, the fall in the yuan's exchange rate is shaping market expectations. Depreciation triggers capital flight, and capital flight exerts even bigger pressure on the yuan.
The price action we're witnessing now is very susceptible to these dollar swings and the upside in U.S. Treasuries. Our bias remains for weaker emerging market currencies over the coming quarters.
The president's dovish policy prescriptions don't match market realities.
Temporarily they are out of the firing line and safe with just delivering a hawkish message.
The collapse in FDI (foreign direct investment) is negative for Turkey's growth over the medium to long term. That's caused by political concerns with the purge and I don't see a near term end to this.
The incentives for banks to issue more off-balance sheet WMPs still exists. There's nothing in these rules that disincentivizes banks from continuing on with more off-balance sheet activity.
It's really more of a dollar strength story - if you compare the dollar to the euro or the yen, then the weakness isn't restricted to emerging markets currencies. The central bank is showing it doesn't really want to waste its FX reserves on something that it cannot influence at the moment.
The dollar is taking a pause but with good reason - the U.S. is on holiday tomorrow and it's going to be a very light day the day afterwards. Investors will probably end up coming back on Monday to refocus not so much on the dollar and the U.S. story but more what are their expectations for Europe going forward.
The general slowdown of the Chinese and world economies over the past few years has impacted global trade growth across all currencies, not just the yuan. On a positive note, the inclusion of the yuan in the Special Drawing Right (SDR) basket should generate further trust and confidence in the RMB currency and support further yuan internationalization.
We have capital controls as the last line of defense. It is not necessary for us to worry too much about the short-term and volatile depreciation in the yuan.
Preventing the yuan from reaching market equilibrium is objectively a rejection of raising the cost of capital flight. It even encourages capital flight.
The dollar continues to move higher today and that has triggered some selling in the Asian markets.
Traders are positioning for another USD leg higher, despite concerns that we are nearing a near-term pinnacle from the USD positivity of Trump mania. Up until now, the People's Bank of China has been unperturbed about the sliding yuan, but may be concerned about the rapid pace of the depreciation enough to 'pump the brakes,'.
It (the buying) could be driven by the panic in reaction to the recent depreciation of the yuan.
We do consider Turkey as being one of the least protected during this renewed pressure on EM.
It is a market consensus that the peso is undervalued, but because it is at the eye of the storm it is very difficult to advocate bottom fishing at this point.
I don't think his case holds water in terms of him labeling the country as a currency manipulator. They're doing everything they can to open up their market to make it more global.
Right now, I'd say it's just rhetoric.
This isn't the right time to signal that China's long-standing exchange rate management has crossed over the line and become manipulation. If China responded by ending all exchange rate management – no daily fix, no band, no intervention, a true float – the renminbi would certainly fall, and potentially fall by a lot.
In the mid-2000s, it was undervalued. That's no longer the case now.
It's been weakening pretty steadily. I think the weakness continues until we see China have a rebound in growth, and I think the rebound in growth will come out of the export market.
It was about where we thought it would be. It's in line broadly with the dollar being firmer.
Given that I think the U.S. dollar has broken through the last December's highs, we could see further strength in the U.S. dollar and that could put further weakness onto the yuan, particularly against the U.S. dollar.
While the PBOC might prefer to slow the pace of depreciation, the dollar trend is a key factor in their decision process. Additionally, yuan trading volume remains elevated, which typically coincides with more capital outflows and yuan depreciation pressure.
It's really a U.S. dollar story at the moment.
The association will facilitate adequate yuan liquidity for trading and investment between the local and Chinese economies. This will also lead the way for future product developments.
This kind of mild depreciation could not help much on exports, but would certainly force capital controls to escalate and the RMB internationalization to reverse.
If protectionism does escalate globally, China might retaliate by allowing for bigger RMB depreciation. It would be a trade war and hurt everyone.
The recent yuan weakness has meant that they are being used heavily.
Trump is likely to encourage a large CNY (Chinese yuan renminbi) devaluation ahead, ironically the opposite of what he wants to see. Once it (the renminbi) finds a more natural - and lower - level, it might become more popular as a reserve, though that will still be tricky unless China runs a trade deficit rather than a surplus.
We need significantly more detail before we can draw conclusions on the relative stability of the dollar and the change in preference from USD to RMB would not happen overnight, it would be a gradual change over the course of the next few years.
It is possible that Trump could boost renminbi as a reserve currency as the relative safety of the U.S. dollar comes under question due to the uncertainty surrounding President Trump. Some of Trump's rhetoric surrounding negotiating the U.S. debt burden, for example, could damage the U.S. dollar as a reserve currency.
No longer is the U.S. dollar the only haven of safety. There is an alternative – renminbi.
Back in 2013, 35 billion yuan (US$5.15 billion) was our one-day GMV (gross merchandise volume). Now we can achieve it in one hour.
The PBOC is caught between a rock and a hard place in the face of a strong U.S. dollar and huge waves of capital outflows.
Liquidity in the interbank market has tightened some, but looking at M2 growth it is not that low, so I think overall policy is neutral. We can't say there's been tightening.
The RMB internationalization drive may receive a boost if the U.S. becomes more isolationist and China's political standing increases.
For this year's Singles' Day, I'm going to spend at least 10,000 yuan ($1,473).
We expect demand for physical gold to go up as people will be going for safe haven buying. If the renminbi continues to depreciate, of course demand for gold will be there.
Any currencies that are highly linked into the trade cycle will probably react badly in a Trump victory. The Australian dollar, for example, and the renminbi.
In this respect, this kind of cooperation is very useful because in this situation no one will be able to block the development of financial traffic. I believe that the use of the yuan in mutual settlements, the use of positions opened in yuan and rubles, mutual financial transaction technologies, and the use of co-branding cards - all of this is very useful for our countries.
One of the real things is just nexus. Canadian banks have historically not been as big in the China sphere - panda bonds give you an onshore hedge, so it is really whether you need the RMB.
Over the past year, we have helped many clients allocate their wealth into U.S. dollar assets, and the biggest obstacle we encountered was how to move renminbi overseas in a proper, legal manner.
The yuan will eventually appreciate, but it is hard to predict the time.
Prices have been booming in China, which has been driving some people overseas.
There's been a real focus on America, driven by the devaluation of the yuan against the dollar. Last year people were speculating about a falling yuan but this year its been right there in front of their eyes.
Generally speaking, the market is relatively stable, as investors pin hopes on the success of state company reforms despite short-term risks from yuan depreciation and rising money market rates.
The market is starting to get a bit nervous about further weakness in the yuan, which could lead to greater capital outflows.
We believe the expansion of the scheme from seven PLPs to nine PLPs, with the total PLP facility increased from 14 billion yuan to 18 billion yuan, will further strengthen the liquidity and resilience of the CNH market.
That highlights the extent to which dollar gains are unlikely to be as extended as they were (in the past). As the dollar pushes higher against the yuan, which has a large weighting in the Fed's exchange rate, it means the Fed is going to be more likely to rein in some of its more hawkish rhetoric, because of the strong dollar, negative risk feedback loop.
Strong U.S. manufacturing data boosted U.S. bond yields and supported the dollar.
We want to bundle all the resources of different private businesses to play a leading role in the Chinese economy.
We are looking at quite a few segments, encompassing financial and industrial assets. We are already heavily involved in new energy, property management, prefabricated construction, investment banking, leasing and insurance.
In general there's still the fear of the effects of depreciation. The recent moves on the fixing are bringing back memories from 2015.
Because of the political uncertainty the lira is prone to sell off. The Turkish economy is going through a soft patch too - recent indicators suggest it's not firing on all cylinders.
The ECB injected more uncertainty than anything else. This is enough to disturb the market... It's probably a pause in the market in terms of risk-taking.
Further yuan depreciation, which many people expect, is good for exporters, but it will also have a negative psychological impact and curb risk appetite. I don't see a big trend forming, either upward or downward. The market will likely to remain rangebound in the fourth quarter.
The transmission mechanism for the last problems when the Fed raised rates last December … was that the Chinese yuan was overvalued, then that went down, you had the whole capital flight thing and tightening of financial conditions. This time, the yuan has already devalued, so that's sort of out of the way, so I think the market can actually handle it.
The inclusion of the yuan helps reduce the volatility of SDR's exchange rate and therefore makes the value of SDR more stable. These SDR bonds, to be settled in RMB, will help promote SDR financial instruments, provide a channel for investors to invest in foreign currency bonds in the onshore market, and offer more diversified bond products in the market.
On the economic side, whether it's the stock market, trade, investment and business sector, please don't stop.
We have only seen two or three days of net outflows from the local equity and bond markets and the sizes are not very big.
We have got a stronger dollar and that is the market now pricing in the likelihood of a December U.S fed rate hike. The other theme is the weakness of Chinese exports. That does help turn the spotlight on the recent weakness of the yuan. Then of course there is sterling.
(This data) is not good for the renminbi but it will also weigh on U.S. treasury yields.
Real estate is very important to China's economy. Now that property sales are restricted, many industries would be hurt, including appliance makers, car companies and furniture producers.
I had estimated a selling price of 63,000 yuan before. It's now dropped by around 20 per cent. At this price, a 62 per cent selling rate is very low.
There were several technological advancements demonstrated, some of which could be promising avenues to increase the number of transactions that the bitcoin network could process. These new advancements could once again position bitcoin to continue to innovate and sustain higher transaction rates which could foster wider adoption.
The Chinese central bank's decision not to intervene in stabilising the yuan means traders are running scared. Bitcoin is a port in the storm.
In my estimation, banks would need to fill gap of 1.4 trillion yuan in the worst case scenario. A simple tax waiver from the government would take care of this gap and so this is unlikely to cause financial instability.
The bigger picture is that growth weakened over the first two months of Q3 and September's manufacturing PMI suggests that activity remained sluggish at the end of the quarter. All told, it still looks like the Turkish economy slowed substantially following the attempted military coup.
All told, it still looks like the Turkish economy slowed substantially following the attempted military coup.
We don't think the move in the fix was notable when you look at it in context to the offshore market. It's still around the 6.70 area; it hasn't aggressively broken through.
It's obviously trading as the barometer for the presidential election. The pressure has been on Trump in the past few days and that's coincided with a move down in dollar/Mexico.
It's almost US$20 billion, which is quite a considerable fall. I think there is still quite significant intervention in the currency markets by the PBOC and I think today's data highlights that.
I think there is still quite significant intervention in the currency markets by the PBOC and I think today's data highlights that.
The RMB joins the SDR formally on Oct 1. Some people would argue that ahead of the formal entry, they've been bending over backwards to keep the currency stable so afterwards, they might have less of a reason to keep it stable.
Being part of the SDR basket at the IMF is quite a ways away from being a global reserve currency.
Prices have risen 2,000 yuan ($299.84) per square metre on average in the past two months. That's almost a 30 percent rise from July.
A Chinese consumer pays the daigou in renminbi. The daigou buys the product using the Australian dollar and then ship it.
I don't see any bright spots or growth momentum for the yuan pool to expand.
In Hong Kong, there are many stocks with relatively higher yields, lower valuations, and relatively sound balance sheets. They're attractive to Chinese investors in terms of allocations due to yuan depreciation pressures and low bond yields at home.
CNH Hibor is likely to drop after the National Day holiday in October.
It's one year after the yuan's sharp depreciation and quite soon it will be included into the SDR basket, so there's speculation that China's central bank might intervene to stabilise it. But there's no confirmation of that.
I don't think the rising CNH Hibor is caused by one single reason. We are near quarter-end and close to SDR inclusion, and also there will be holidays, which makes banks cautious (in terms of yuan lending).
You cannot spend one month to investigate one person and then in the end you only land 100,000 yuan.
The establishment of a yuan clearing centre in South Africa in July 2015, as well as Singapore's increased use of the yuan for payments with South Africa, have been a catalyst for yuan growth in the region.
I will focus on this field and invest millions of yuan every year in research and development in the hope of launching new products some day.
Some might use cash flow to pay back dim sum debt. It's difficult to refinance in offshore yuan markets (due to the high cost).
For me to be convinced on a September rate hike, I would have wanted to see more dissents. The reason I lean against it and say the bar is high, is because I think they're still worried about the international developments. There is an Italian vote in October that could rattle markets and China's yuan becomes part of the IMF's key currency basket.
The whole nature of WMPs and AMPs is that it's a murky area. There is a degree of regulatory arbitrage there and it's clearly a way for (the banks) to get around the prudential rules. It's concerning that the scale of this sort of activity is widening, and there is no effective regulation around this.
At the moment, U.S. markets are attracting global funds. Globally there remain risks, such as European financial institutions or the Chinese yuan. We have to see if investors are ready to diversify to other markets than the U.S. in coming weeks.
China has been pushing for the SDR to become more widely used for some time, as a way to challenge the dominance of the dollar without pushing the renminbi as a direct competitor.
If you ask me whether a weakening yuan is a good thing for China, I cannot say so. Whether up or down, a rapid yuan movement is undesirable.
Lew and I agreed to two points, that China needs to implement economic structural reform, and China needs to show greater transparency for its yuan currency system.
It seems to me China's central bank has put a brake on CNY depreciation, at least temporarily.
The Chinese renminbi is moving a little bit over time but I don't think it's really something that...bugs G20 policymakers at the moment.
The second quarter growth figure came in slightly better than expected, but there is still a lot of uncertainty about the outlook for the second half.
The move is another step in China's reforms to open up its domestic market and to support free trade zone development. As for the timing, it will help ease the pressure of renminbi depreciation and capital outflows since the adjusted measures will encourage more foreign investment in China.
Overall sentiment is quite positive. I expect the HSI can move a bit higher and challenge 22,000.
Against a backdrop of capital outflows, fixing the yuan to the U.S. dollar at a certain level will require constant foreign-exchange intervention. Intervention involves selling U.S. dollars in exchange for its own money. When a central bank buys back its own money, there is a contraction in its monetary base or high-powered money, which is essentially a massive monetary tightening.
We had Chinese firms doing essentially liability management. They were paying down their overseas loans and re-contracting onshore in Chinese yuan. That also counts as a capital outflow. It was hard to find evidence of lots of people with suitcases taking money over the border.
China-U.S. trade cooperation is the ballast and propeller of bilateral relations. Its essence is mutual benefit. The yuan exchange rate is not the reason for unbalanced China-U.S. trade. We hope some individuals on the U.S. side can objectively view China-U.S. trade relations, do more to benefit mutual trust and cooperation, and jointly safeguard the healthy and stable development of China-U.S. trade relations.
The correction from a day or two ago had more to do with a technical correction that it did with Brexit.
Today is a big test day not only for the confidence of Britain towards the European Union but also for the PBOC on managing the movement of the yuan. The PBOC has reiterated that the yuan is liberalized towards a more market-oriented currency. It is important for the regulator to demonstrate to the market that it allows movements in the [onshore yuan] and [offshore yuan] market to reflect the volatilities created by the Brexit voting event.
Since the expectation of capital inflow due to the inclusion of A-shares into MSCI has gone, the expected capital inflow dissipates, the yuan (both onshore and offshore yuan) is set to depreciate beyond 6.6 today.
The ability to do RMB transactions in the United States will be a real advantage, to small firms in particular and to large businesses that are not financial businesses. It will make it easier, it will make it cheaper.
China's intervention in the last year has not been to devalue but it's been largely to support the RMB. I think the test of whether China's moved decisively in an orderly way to a more market-oriented exchange rate is whether they're willing to tolerate movement in both directions.
When the dollar weakens, the yuan peg follows. When the dollar is firmer, the yuan peg resorts to the basket mechanism to smooth out the inevitable yuan depreciation, and slow the pace of capital outflows.
We are seeing more dollar strength and a lot of it against the smaller currencies. The Chinese authorities are keeping the yuan exchange rate quiet, too, which is giving the Fed the room to wax lyrical and be as hawkish as they are being.
It just doesn't feel right, but I was always taught that an asset at all-time highs, or even 52-week highs, is outright bullish and should be traded as such - but no one believes we are here. many in the market are clinging to the first-quarter macro concerns (China yuan devaluation, low oil, low growth/recession, negative interest rate policy concerns and deflation fears) that they have missed the move higher.
The currency policy changes put in place after mid-January are showing a strict adherence to the basket peg. It is a more disciplined policy.
Looking ahead, we believe that the pressure on CNY will moderate somewhat, while the capital outflows are likely to continue over the foreseeable future.
If the dollar is going to rise significantly further in the coming months, then I think the pressure on the renminbi will continue.
In the past few months, the PBoC intervened intensively to prevent a fast depreciation of CNY (Chinese yuan), and many believe that they have also stepped into the FX forward market.
The timing was really bad. The change was made during a time that the yuan faced increasing depreciation pressure and the economy was not faring well.
We do think the dollar will rebound as we go into the months ahead.
I think we can get there by stealth. market forces could help to weaken the yuan gradually.
Growth is meaningless unless it is sustainable. Thus, we have turned our focus to quality growth and broadening domestic consumption.
While GMV is a proxy for scale, our focus on quality and sustainable growth means how we measure success is no longer dependent on a simplistic view of GMV growth.
We think they should go bold, they should go broad and they should go together. There has to be action on all fronts.
China's current account balance situation is good, and there is no basis for continued renminbi depreciation.
I spend mostly on sports shoes and sports watches. From an expenses point of view, not including transport fees … I spend a few thousand yuan a year. But if I start biking, then I suspect I'll start spending a lot.
China's status as the world's largest holder of foreign exchange reserves has not changed, the large-scale trade surplus has not changed and the steady progress in the yuan internationalisation has not changed.
Although we consider the violent risk-off move of recent weeks largely unwarranted by economic fundamentals, the sheer magnitude of the sell-off has raised the risk that market volatility could feed back into the real economy.
Of these, we consider China the biggest medium-term risk, but the least immediate issue.
Just as China's persistent accumulation of foreign reserves in the first decade of the 21st century signalled that its managed currency was undervalued, its persistent loss of foreign reserves signals that the yuan has become overvalued by market criteria.
Clearly, the market sees that the intensive intervention from PBoC (People's Bank of China) is not sustainable, and therefore the central bank will have to let the currency go at some point.
There has been a growing market belief that the yuan will weaken and in this respect there has been an increase in short yuan trades since the summer through the offshore market, options and non-deliverable forwards.
The $3 trillion mark is an important psychological level and if reserves fall below this mark, that would encourage the yuan bears.
The grand macro-economic elephant in the room is what happens if China is forced into a major one-off devaluation in retaliation. Markets are unlikely to react well to a big yuan devaluation, and the further the ECB and the BOJ force their currencies down, the more they push the PBOC to act themselves.
This trade does tend to attract tourists (late-comers) and when something like this latest squeeze back happens they hold up their hands and return to this argument that the authorities control the value of the yuan.
We have a direct position in the (yuan) but it's much easier to trade second-round effects of China. The Korean won, Malaysia, Taiwan, are all easier plays.
It's a popular trade. I can't imagine a single western hedge fund has got short dollar-(yuan).
The yuan will keep depreciating as time goes by, so we should swap the money we have in hand into tangible assets.
As the (yuan) exchange rates calm after recent interventions, stocks are likely to stabilize, and can even stage a technical reprieve in the near term. Recovering oil prices amid the epic (U.S.) snow storm will also help, and non-commercial traders have already cut their bets.
When the market is this bad, it's reasonable to say it might be telling you something, but it's also reasonable to say 'maybe it's not, . My own view is that you've had four or five things very different that are taking place. China scared people with this bungling of the yuan ? their currency ? and their stock market, and their lower growth changed flows around the world. Commodity prices are down substantially now.
The ongoing market turmoil puts further rate hikes by the Federal Reserve on hold and increases pressure on China to make radical adjustments, such as a rapid devaluation of the yuan to spur growth in domestic export industries.
We can't help feeling some déjà vu. Our baseline scenario for 2016 has been for the yuan to depreciate modestly, say 3 to 4 percent, against the dollar but see limited change in trade-weighted terms. Risks to this are skewed to more substantial depreciation, with growth sluggish and inflation low.
The yuan is under depreciation pressure, but China has the ability to control its pace, and indeed the yuan has already stabilized.
All in all, it appears that the Chinese authorities want to dampen the speculative flows that bet on a fast depreciation of its currency.
The abnormal stock market volatility has revealed an immature market, inexperienced investors, an imperfect trading system, and inappropriate supervision mechanisms.
After experiencing the crashes last year, the sentiment is quite vulnerable and pessimistic now.
The abnormal fluctuations on the stock exchanges have revealed the immaturity of the Chinese markets, inexperienced traders and a trading system that is imperfect. They also exposed shortcomings in the supervision, as well as regulation mechanisms that are inappropriate and ineffective.
Raising the RRR will increase the cost of arbitrage.
Domestic banks conducting exchanges offshore and remitting yuan to China will be further controlled, pushing up the cost of offshore yuan funding.
The expectation of yuan devaluation has led to massive remittance of yuan.
Asian markets look set for a bounce today, but its sustainability is still an open question. The big unknown today is whether we have seen a sustainable bounce in Chinese equities and whether yesterday's gains can be held onto. Some sense of stability does seem to have been wrestled into the Chinese yuan this week, but the Chinese equity markets have been more immune to muscular shows of state intervention.
We notice a rise in gold investment whenever there's concern over yuan depreciation. Buying gold also helps investors avoid risks in equities. It serves double purposes.
Just more stability coming out of the Far East. Some stability coming into the yuan. We had a rebound yesterday that was decent. Some of the market internals weren't strong. The question will be, can it carry through today?
The PBOC crossed the Rubicon when they intervened in the offshore market last year.
The frequent intervention will weaken investors' confidence in the PBOC on whether it really is willing to liberalise the renminbi market as well as the credibility of its policies. Too much intervention in the market is negative in terms of boosting yuan internationalisation.
Another large trade surplus provides a cushion for the People's Bank of China in the face of soaring capital outflows.
China's trade data for December support our view that, despite the turmoil in Chinese financial markets, there has not been a major deterioration in its economy in recent months.
As both imports and exports to Hong Kong broke with trends in a major way, it suggests the figures are likely driven by capital flight.
I think if the (yuan) is weaker tonight and the trade data is weak, then this will impact the Shanghai composite and have some spillover. I think next to China uncertainty, the big issue affecting U.S. markets are low oil prices and high oil volatility.
Different signals about FX policy have wrong-footed market participants, and we are wary in believing that an immediate calmness will soon emerge. In this context, we expect Yuan volatility to remain high, while depreciation pressures are likely to remain strong.
My bottom line remains that gradual, further depreciation of the renminbi is the most likely outcome, maybe for another five to 10 percent to help stimulate the economy, but nothing more dramatic.
At the moment the yuan is weakening against the dollar but is remaining broadly stable relative to the PBOC's basket [of other currencies].
The Chinese authorities clearly want to signal that it will not be a one-way trade in the renminbi.
The market is back to normal. Investors can buy and sell as they wish. Under the circuit breaker mechanism, the market was suffocated.
Some forces attempt to make profit from speculating on the renminbi. This kind of trading ... only leads to abnormal fluctuations in the yuan's exchange rates.
For now, the only way to trade gold is to take a view on the equity markets and on the Chinese market in particular, as it seems to be the driving force that is pushing the rest of the space lower.
We're seeing a little bit of a relief rally but I think the impact should be short-lived, a couple of days maybe. The mid-term outlook for the yuan is still weak given the capital outflows and the slowdown in the economy. The PBOC's dilemma is how to steady the market while adjusting the currency to a more market-based regime.
The PBOC is trying to instill two-way risks in the yuan as it doesn't want investors to get carried away on speculation that the currency will continue to slide.
While the market was left with uncertainty on how far the yuan will fall, the Chinese central bank's action (the stronger fix on Friday) was taken as a signal that it does not intend to keep allowing the yuan to fall.
The lower yuan fixing probably signifies greater risks to the Chinese economy than we know of, leading to risk-off trades. Its not surprising that the yen is gaining and we could see it rise further if stock markets continue to lose ground.
The Chinese yuan weakness onshore and more importantly, the PBoC allowing the yuan to reflect weakness in economic fundamentals, sends a more accurate signal on the state of the Chinese economy and a bigger threshold for the government to accept pain. The floor is getting lower.
They should just lift [the circuit breaker] or cancel it completely and have a 10 percent trade limit on individual stocks.
The yuan is already putting a lot of pressure to markets.
That's the fear of the market.
It's been known that China's economy is not in a good shape. What markets don't like above all is that there is no telling what the Chinese central bank is trying to do on the yuan.
Everyone has been taken by surprise by the scale of the volatility this week. It's all driven by China.
The sudden movement of the dollar-renminbi fixing rate will definitely create more market volatility. In general, we think that the Chinese authorities will tolerate more weakness in the renminbi for the time being.
The fact that the euro is strengthening suggests global disinflationary pressures seem more acute in Europe. The weakening of the yuan points to the U.S importing deflation as Chinese imports are cheaper and in Europe, because the euro is strengthening versus the dollar as the yuan is weakening against the dollar, the impact is magnified.
A decline of the yuan might be an indirect message to the Federal Reserve not to raise rates this week. China may start devaluing its currency faster than before in order to increase its goods competitiveness to support its trade balance surplus which eased notably recently.
We think that asset quality will continue to deteriorate and the worst is yet to come.
We believe ASEAN credit quality is set to deteriorate further, as existing trends are exacerbated by yuan devaluation.
The problem is we have been used to the RMB, the yuan, being stable. It is basically a pegged exchange rate still, despite all the talk about widening bands, capital account liberalisation. China has fixed its exchange rate. The US dollar has now strengthened. That has taken China up with it and China has lost competitiveness.
So, though in a deflationary environment where oil prices remain weak, we have seen the POBC allow its currency to appreciate, to export its inflation. They have decided to continue to appreciate the yuan, also because (possibly) they want to liberalise their currency. So we think the yuan is already an international reserve currency and it's used by many central banks already. We expect this trend to continue as China will keep on pushing this year to have the yuan adopted by the IMF to be one of their currencies.
Well, it is a fact that the European Union does not have the kind of strategic outreach into our part of the world, but there is definitely a big part the EU can play because it can deepen its trade and economic linkages with our part of the world.
The G20 has a framework in place for balanced growth at a global level, in which each of the three main players, the US, Europe and China, must act. I believe that is the solution, but China has its work cut out for it.
It's politically very hard to point the finger at China as the country that has to act alone.
That doesn't mean the dollar will suddenly stop being the leading currency but it will be more and more complemented by the euro. The yen will play an important role, so will the Chinese Yuan, so I think the world will become more multi-polar.
Why are they [the central government] taking such a long time? Because they are very cautious. They have to balance the so many different requests from other cities. For example, why Qianhai? Why not Shanghai?
We do think that the success of European recovery is in the best interests of China. We expressed our concerns as regards recent declarations about the speculations concerning the possibility of a currency war. This would be destructive as would be any form of trade protectionism.
Given the international balance of payments and market supply and demand, the level of the yuan is already reasonable and balanced.
The problem is we have been used to the RMB, the yuan, being stable. It is basically a pegged exchange rate still, despite all the talk about widening bands, capital account liberalisation. has fixed its exchange rate. The US dollar has now strengthened. That has taken up with it and has lost competitiveness.
The problem is that you've got a bunch of export producers in China that like the system as it is and making changes is difficult for them politically. I get it. But the United States and countries, I think understandably, feel that enough's enough.
We didn't expect a 20 percent revaluation in a week. That would be disruptive to the Chinese economy, that would be disruptive to the world economy.