Ouch - Yuan Devalued

[craigt3365]

http://www.bbc.com/news/business-33858433

China devalues yuan currency to three-year low

China's central bank has devalued the national currency, the yuan, to its lowest rate against the US dollar in almost three years.

The lender said the move was a "one-off depreciation" of 1.9% in a move to make the exchange rate more market-oriented.

It comes in the wake of a string of weak economic data from the world's second largest economy.

At the weekend, China reported a sharp fall in exports and a slide in producer prices to a near six-year low in July.

Continued:

http://www.bbc.com/news/business-33858433

[Time Traveller]

Next step: Chinese QE.

[Digitalbanana]

Golds up

[Asiantravel]

Next step: Chinese QE.

But in China, there is a big problem with this fuelling inflation.… and social unrest comes when suddenly a nation of newly minted equity losers can no longer afford pork now facing record shortages

http://market-robots.com/blog/2015/08/11/why-china-can-not-release-the-larger-stimulus-in-3-simple-charts/

Edited August 11, 2015 by Asiantravel

[Carmine6]

Something that probably reflects what's going on in China, is airline fares from Los Angeles to Asia recently fell off a cliff. Normal round trip prices LAX to BKK are about $900 to $1,100 this time of year with about a month advance purchase. Last minute is maybe $1,400. I was checking fares about 45 days ago and that's about what I was seeing pricing tickets out for Aug or Sept.

Then one day they just dropped. I recently booked Eva Airways round trip for $664.25 (all taxes included) with a month advance purchase. I can book a trip about 2 weeks from today for a bit over $700 still, and into October. Haven't paid that little since 2006 or 2007. This is not a long layover flight or anything weird, but about 1 1/2 hour layover in Taipei both ways.

The airlines that connect in China were even cheaper, which is what seems to have taken the market down. Clearly there was some big drop off in demand out of China. Farther out, like October, the prices are showing more normal, but back to $600 for the Chinese carriers in November. Whatever the official stats say about growth in China, there is suddenly a whole lot fewer Chinese flying, or businesses people visiting suppliers, or customers.

[Naam]

calling the widening of a currency's floating bandwith by 1.9% which caused CNY to fall 1.63% vs. US-dollar a "devaluation" after CNY gained nearly 24% vs. USD during the last 10 years is indeed a journalistic masterpiece.

that applies especially when looking at the exchange rates of several dozens other currencies which lost vs. USD up to 50 (and more) percent during the last 18 months.

[Pib]

Well, the yuan devaluation has also caused baht to slide down around 0.75% against the USD and other currencies. Take a look at this snapshot from Bloomberg.com on the USDTHB forex rate as of 11 Aug/5:41pm Thailand time...notice the spike.

[Time Traveller]

calling the widening of a currency's floating bandwith by 1.9% which caused CNY to fall 1.63% vs. US-dollar a "devaluation" after CNY gained nearly 24% vs. USD during the last 10 years is indeed a journalistic masterpiece.

that applies especially when looking at the exchange rates of several dozens other currencies which lost vs. USD up to 50 (and more) percent during the last 18 months.

You are the one falling for the journalistic propaganda because there is nothing "floating" about the rate of the RMB. It trades wherever the Chinese want it.

And they've now realized that they can not have a strong Yuan and still be an export economy.

And why are you talking about the past? What matters is the present and the future. Somethings got to give. Either the exporters and with it the economy, or the RMB. I'm betting they'll sacrifice their currency. And the only reason it was such as small devaluation was to give a clear early warning to the chinese corporations with high $ denominated debt that they better have a plan B or else things are going to get much worse for them when the RMB is at 7 to the dollar.

You can be sure that they would have loved to devalue by 10% or more, but I think the Swiss National Bank lesson of large currency devaluations put an end to that.

Edited August 11, 2015 by Time Traveller

[midas]

calling the widening of a currency's floating bandwith by 1.9% which caused CNY to fall 1.63% vs. US-dollar a "devaluation" after CNY gained nearly 24% vs. USD during the last 10 years is indeed a journalistic masterpiece.

that applies especially when looking at the exchange rates of several dozens other currencies which lost vs. USD up to 50 (and more) percent during the last 18 months.

You are the one falling for the journalistic propaganda because there is nothing "floating" about the rate of the RMB. It trades wherever the Chinese want it.

And they've now realized that they can not have a strong Yuan and still be an export economy.

And why are you talking about the past? What matters is the present and the future. Somethings got to give. Either the exporters and with it the economy, or the RMB. I'm betting they'll sacrifice their currency. And the only reason it was such as small devaluation was to give a clear early warning to the chinese corporations with high $ denominated debt that they better have a plan B or else things are going to get much worse for them when the RMB is at 7 to the dollar.

You can be sure that they would have loved to devalue by 10% or more, but I think the Swiss National Bank lesson of large currency devaluations put an end to that.

" And why are you talking about the past? What matters is the present and the future"

[Naam]

calling the widening of a currency's floating bandwith by 1.9% which caused CNY to fall 1.63% vs. US-dollar a "devaluation" after CNY gained nearly 24% vs. USD during the last 10 years is indeed a journalistic masterpiece.

that applies especially when looking at the exchange rates of several dozens other currencies which lost vs. USD up to 50 (and more) percent during the last 18 months.

You are the one falling for the journalistic propaganda because there is nothing "floating" about the rate of the RMB. It trades wherever the Chinese want it.

And they've now realized that they can not have a strong Yuan and still be an export economy.

And why are you talking about the past? What matters is the present and the future. Somethings got to give. Either the exporters and with it the economy, or the RMB. I'm betting they'll sacrifice their currency. And the only reason it was such as small devaluation was to give a clear early warning to the chinese corporations with high $ denominated debt that they better have a plan B or else things are going to get much worse for them when the RMB is at 7 to the dollar.

You can be sure that they would have loved to devalue by 10% or more, but I think the Swiss National Bank lesson of large currency devaluations put an end to that.

" And why are you talking about the past? What matters is the present and the future"

i hate to reveal a secret and embarass you gentlemen. but CNY's 24% appreciation is not "about the pastI it is calculated as of today.

definition of "today": the day after yesterday as well as the day before tomorrow.

by the way, a little logical thinking before shooting from the hip into one's own foot thereby avoiding being ridiculed is advisable.

[KittenKong]

I think the most interesting question about China's "devaluation" (and as it was a deliberate reduction in value it is indeed a devaluation, though hardly a spectacular one like that of Russia last year) is whether or not other Asian countries like Thailand will also act to push their own currencies down, in order to remain competitive or to encourage tourism or inward investment or whatever?

I think they probably will.

[CaptHaddock]

In a world of slow economies exporting nations engage in competitive devaluation. Japan last year. Lately China. The same thing happend in the Great Depression. Asian currencies will continue to decline as long as the weakness of the importing economies continues. Makes me wonder if the Germans are screwing Greece as a way to devalue the Euro from which they benefit greatly.

[Naam]

I think the most interesting question about China's "devaluation" (and as it was a deliberate reduction in value it is indeed a devaluation, though hardly a spectacular one like that of Russia last year) is whether or not other Asian countries like Thailand will also act to push their own currencies down, in order to remain competitive or to encourage tourism or inward investment or whatever?

I think they probably will.

Mr. Market has done the pushing already. all asia-pacific currencies fell with CNY.

calling less than 2% devaluation or depreciation is a matter of perspective. nobody used the expression devaluation during the last few years looking at the currencies listed below

-Japanese Yen falling.......... 50%

-Aussie Dollar falling........... 49%

-EURo falling...................... 39%

-Canadian Dollar................. 39%

-Kiwi Dollar falling............... 35%

-Singapore Dollar................ 17%

-Norwegian Krona................59%

-Indian Rupee..................... 57%

-Indonesian Rupiah............. 62%

-Brazilian Real.....................81%

[TheAppletons]

I think the most interesting question about China's "devaluation" (and as it was a deliberate reduction in value it is indeed a devaluation, though hardly a spectacular one like that of Russia last year) is whether or not other Asian countries like Thailand will also act to push their own currencies down, in order to remain competitive or to encourage tourism or inward investment or whatever?

I think they probably will.

Mr. Market has done the pushing already. all asia-pacific currencies fell with CNY.

calling less than 2% devaluation or depreciation is a matter of perspective. nobody used the expression devaluation during the last few years looking at the currencies listed below

-Japanese Yen falling.......... 50%

-Aussie Dollar falling........... 49%

-EURo falling...................... 39%

-Canadian Dollar................. 39%

-Kiwi Dollar falling............... 35%

-Singapore Dollar................ 17%

-Norwegian Krona................59%

-Indian Rupee..................... 57%

-Indonesian Rupiah............. 62%

-Brazilian Real.....................81%

C'mon, you know the answer to that.

Devaluation is the term used when countries that have currencies with fixed exchange rates revalue the worth of their currency downward; depreciation is the term used when a country's currency fluctuates downward in a floating exchange rate system.

Edited August 12, 2015 by TheAppletons

[derator01]

Since this topic is running here:

http://www.thaivisa.com/forum/topic/847540-ouch-yuan-devalued/

Let's close this one. Topic Closed.