Post From KTFA - Emailed To Recaps
Post By Backdoc & Walkingstick
THE CRACKS IN THE ICE ARE GETTING WIDER WITH CHINA DE-PEGGING FROM THE DOLLAR!
AS THEY FLOAT TO THE BASKET JANUARY 1 ST, THERE WILL BE A NEW ASSET BACKED BEGINNING!
IN JUNE OF 1981 THE SAUDI RIAL PEGGED TO THE DOLLAR. WE HAVE SEEN THIS UNIVERSAL CURRENCY, "BLACK GOLD", CONTROL EVERY CURRENCY IN THE WORLD THROUGH THE PETRO DOLLAR! HAS ITS SERVED ITS PURPOSE? MMMM
WILL EARLY COMMENTS SEEN BY GOLDMAN SACHS BE RIGHT? WILL THE DOLLAR DEPEG FROM OIL?
~~~
Post By Backdoc & Walkingstick
THE CRACKS IN THE ICE ARE GETTING WIDER WITH CHINA DE-PEGGING FROM THE DOLLAR!
AS THEY FLOAT TO THE BASKET JANUARY 1 ST, THERE WILL BE A NEW ASSET BACKED BEGINNING!
IN JUNE OF 1981 THE SAUDI RIAL PEGGED TO THE DOLLAR. WE HAVE SEEN THIS UNIVERSAL CURRENCY, "BLACK GOLD", CONTROL EVERY CURRENCY IN THE WORLD THROUGH THE PETRO DOLLAR! HAS ITS SERVED ITS PURPOSE? MMMM
WILL EARLY COMMENTS SEEN BY GOLDMAN SACHS BE RIGHT? WILL THE DOLLAR DEPEG FROM OIL?
~~~
WILL TPP NOW TAKE ITS PLACE CONTROLLING ALL CURRENCIES AS WELL AS MANAGING SUPPLY, DEMAND, AND PRICING WORLD-WIDE? MMMM
TODAY WE SEE THE MOST POPULAR U.S. CANDIDATE ACCORDING TO SOME POLLS IN A SEEMINGLY VERBAL WAR ON IMMIGRATION COMMENTS MADE.
WILL THIS ADD FUEL TO THE FIRE AS THE SAUDI PRINCE ALAWEED GOES ON THE ATTACK BY SAYING HE SHOULD DROP OUT OF THE RACE? MMMM
WHAT A COMPLICATED BEGINNING TO THE END OF DAYS! DOC IMO
walkingstick wrote:
China’s Central Bank Signals Intention to Loosen Yuan’s Peg to Dollar
PBOC says it makes more sense to measure yuan’s exchange rate against basket of currencies
Updated Dec. 11, 2015 12:53 p.m. ET
BEIJING—China’s central bank signaled its intention to change the way it manages the yuan’s value by potentially easing its loose peg to the U.S. dollar and instead letting it track the currencies of its broader trading partners.
In an editorial posted on its website Friday night, the People’s Bank of China said the yuan’s exchange rate would be better measured against a basket of currencies rather than the dollar alone.
The foreign-exchange trading system run by the central bank started calculating a yuan exchange-rate index Friday to provide a regular reference against a basket of currencies, the article said.
It isn’t clear whether or when China would make such a move, which it has discussed in the past. But any shift away from the dollar could have broad repercussions for currency markets—such as reducing China’s demand for dollars—as well as for investors and global trade.
It would also demonstrate China’s determination to make the yuan a global currency, with a value determined more in line with other major currencies, and to step out of the dollar’s shadow as the world’s de facto currency.
Referencing the yuan against a basket of currencies now would help keep it “stable at a reasonable equilibrium,” the editorial posted by the central bank said.
The central bank didn’t offer additional details on the makeup of the basket or a timetable for when it actually would change the way it manages the yuan.
As far back as 2005 it discussed pegging the yuan to a basket of currencies, and five years ago made similar comments. Still, the yuan continued to closely track the value of the U.S. dollar, even as other emerging-market and Asian currencies endured more volatile swings during events like the global financial crisis.
China has reasons why it would consider changing its currency management this time. The yuan faces growing pressure to depreciate versus the dollar due to potential higher U.S. interest rates and China’s slowing economic growth has encouraged investors to find places other than China to park their money.
On Friday, the yuan recorded its biggest weekly drop against the dollar—about 0.83%—since a surprise devaluation on Aug. 11. A dollar bought 6.4553 yuan based on Friday’s closing price published by the China Foreign Exchange Trade System.
In recent days, the dollar has been strengthening against the world’s major currencies as investors expect the Federal Reserve to raise interest rates next week.
Longer-term, a basket could indicate China is sticking with its pledge to make its exchange rate move in accordance to the markets. That would help it increase global use of the yuan, another of its goals.
Last month the International Monetary Fund decided to add the yuan to its basket of reserve currencies, which will put more pressure on China’s central bank to bow to market forces.
“Managing the yuan’s value against a basket of currencies rather than just the U.S. dollar is an economically astute move that will facilitate a smoother transition to a flexible, market-determined exchange rate,” said Eswar Prasad, a Cornell University professor and former China head for the IMF.
The move would help Chinese exporters who have seen their goods become less competitive in markets like Europe as the yuan has followed the dollar’s rise against other currencies.
It also would make China less sensitive to the decisions of the U.S. Federal Reserve, which can hurt the value of China’s holdings of dollar-denominated assets when it moves to weaken the dollar.
Potential decoupling isn’t without risks to China. Most investors still look at the dollar-yuan exchange rate when making their China-focused investment decisions, said Zhu Chaoping, China economist at UOB Kay Hian, a Singapore-based brokerage.
“Loosening the yuan’s peg to the dollar now could add to investors’ worry over the yuan’s stability,” he said. “The timing is not necessarily good.”
For now, China is letting the yuan gradually weaken against the dollar. The PBOC is testing how far it can let the yuan depreciate without setting off a sharp selloff like the one that followed the yuan’s surprise devaluation on Aug. 11, people close to the central bank have said.
TODAY WE SEE THE MOST POPULAR U.S. CANDIDATE ACCORDING TO SOME POLLS IN A SEEMINGLY VERBAL WAR ON IMMIGRATION COMMENTS MADE.
WILL THIS ADD FUEL TO THE FIRE AS THE SAUDI PRINCE ALAWEED GOES ON THE ATTACK BY SAYING HE SHOULD DROP OUT OF THE RACE? MMMM
WHAT A COMPLICATED BEGINNING TO THE END OF DAYS! DOC IMO
walkingstick wrote:
China’s Central Bank Signals Intention to Loosen Yuan’s Peg to Dollar
PBOC says it makes more sense to measure yuan’s exchange rate against basket of currencies
Updated Dec. 11, 2015 12:53 p.m. ET
BEIJING—China’s central bank signaled its intention to change the way it manages the yuan’s value by potentially easing its loose peg to the U.S. dollar and instead letting it track the currencies of its broader trading partners.
In an editorial posted on its website Friday night, the People’s Bank of China said the yuan’s exchange rate would be better measured against a basket of currencies rather than the dollar alone.
The foreign-exchange trading system run by the central bank started calculating a yuan exchange-rate index Friday to provide a regular reference against a basket of currencies, the article said.
It isn’t clear whether or when China would make such a move, which it has discussed in the past. But any shift away from the dollar could have broad repercussions for currency markets—such as reducing China’s demand for dollars—as well as for investors and global trade.
It would also demonstrate China’s determination to make the yuan a global currency, with a value determined more in line with other major currencies, and to step out of the dollar’s shadow as the world’s de facto currency.
Referencing the yuan against a basket of currencies now would help keep it “stable at a reasonable equilibrium,” the editorial posted by the central bank said.
The central bank didn’t offer additional details on the makeup of the basket or a timetable for when it actually would change the way it manages the yuan.
As far back as 2005 it discussed pegging the yuan to a basket of currencies, and five years ago made similar comments. Still, the yuan continued to closely track the value of the U.S. dollar, even as other emerging-market and Asian currencies endured more volatile swings during events like the global financial crisis.
China has reasons why it would consider changing its currency management this time. The yuan faces growing pressure to depreciate versus the dollar due to potential higher U.S. interest rates and China’s slowing economic growth has encouraged investors to find places other than China to park their money.
On Friday, the yuan recorded its biggest weekly drop against the dollar—about 0.83%—since a surprise devaluation on Aug. 11. A dollar bought 6.4553 yuan based on Friday’s closing price published by the China Foreign Exchange Trade System.
In recent days, the dollar has been strengthening against the world’s major currencies as investors expect the Federal Reserve to raise interest rates next week.
Longer-term, a basket could indicate China is sticking with its pledge to make its exchange rate move in accordance to the markets. That would help it increase global use of the yuan, another of its goals.
Last month the International Monetary Fund decided to add the yuan to its basket of reserve currencies, which will put more pressure on China’s central bank to bow to market forces.
“Managing the yuan’s value against a basket of currencies rather than just the U.S. dollar is an economically astute move that will facilitate a smoother transition to a flexible, market-determined exchange rate,” said Eswar Prasad, a Cornell University professor and former China head for the IMF.
The move would help Chinese exporters who have seen their goods become less competitive in markets like Europe as the yuan has followed the dollar’s rise against other currencies.
It also would make China less sensitive to the decisions of the U.S. Federal Reserve, which can hurt the value of China’s holdings of dollar-denominated assets when it moves to weaken the dollar.
Potential decoupling isn’t without risks to China. Most investors still look at the dollar-yuan exchange rate when making their China-focused investment decisions, said Zhu Chaoping, China economist at UOB Kay Hian, a Singapore-based brokerage.
“Loosening the yuan’s peg to the dollar now could add to investors’ worry over the yuan’s stability,” he said. “The timing is not necessarily good.”
For now, China is letting the yuan gradually weaken against the dollar. The PBOC is testing how far it can let the yuan depreciate without setting off a sharp selloff like the one that followed the yuan’s surprise devaluation on Aug. 11, people close to the central bank have said.
Still, the PBOC is fighting a difficult battle. On one hand, China’s slowing economy is pressuring the central bank to weaken the yuan to help revive growth. On the other hand, China’s leadership has repeatedly pledged to keep the currency stable in a bid to enhance the yuan’s global appeal—a stated national goal.
The central bank already had spent hundreds of billions of dollars defending the yuan before the IMF added it to the fund’s reserve-currency basket. It would become increasingly costly for China if it continues to do so, many analysts say.
“Now with the IMF decision behind it, the central bank feels less pressured to continue bolstering the yuan,” a senior executive at one of China’s top four state-owned banks said.
Many investors and analysts now think the yuan is overvalued relative to its purchasing power, forcing Chinese companies to cut prices and lower wages to stay competitive, trends that could cause the economy to slide into deflation.
The Chinese currency remains a relatively strong currency by many measures. Since Aug. 11, when the central bank unexpectedly devalued the yuan by about 2%, the currency has fallen 3% against the dollar but has strengthened against the euro and weakened only slightly against a basket of currencies.
Zhou Hao, a senior economist at Commerzbank AG, said given the yuan’s significant appreciation versus the dollar in the past decade, “China is likely to accept more softness in [the] yuan going forward to gain more export competitiveness.”
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The central bank already had spent hundreds of billions of dollars defending the yuan before the IMF added it to the fund’s reserve-currency basket. It would become increasingly costly for China if it continues to do so, many analysts say.
“Now with the IMF decision behind it, the central bank feels less pressured to continue bolstering the yuan,” a senior executive at one of China’s top four state-owned banks said.
Many investors and analysts now think the yuan is overvalued relative to its purchasing power, forcing Chinese companies to cut prices and lower wages to stay competitive, trends that could cause the economy to slide into deflation.
The Chinese currency remains a relatively strong currency by many measures. Since Aug. 11, when the central bank unexpectedly devalued the yuan by about 2%, the currency has fallen 3% against the dollar but has strengthened against the euro and weakened only slightly against a basket of currencies.
Zhou Hao, a senior economist at Commerzbank AG, said given the yuan’s significant appreciation versus the dollar in the past decade, “China is likely to accept more softness in [the] yuan going forward to gain more export competitiveness.”
http://ift.tt/1Q7nhMK
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