" If China devalues in earnest, it will be an earthquake "
Sometimes I post views and opinions I agree with, sometimes I post views and opinions I don't agree with. Some times its a bit of both.
This is from Ambrose Evans-Pritchard on China devaluing the yuan, and it happens to be one of those items I more agree with not.Not just me, I've seen commetns on the site here along similar lines in recent days.
Each day I post up the USD/CNY mid point set by the People’s Bank of China. There is always plenty of commentary from the PBOIC, like will other central banlks, but each weekday we get something better than words, the PBOC currency policy expressed in cold, hard numbers.
In August the world was shocked with a huge devaluation, yesterday the PBOC took the yuan even lower, to its lowest since 2011. I don't want to overblow this, much of the devaluation is reversing the revaluation we've seen in recent years, but it's not only the devaluation, it's the pace of the devaluation that's a concern
Anyway, enough from me, over to AEP (any bolding is mine):
Bank of America expects the yuan to reach 6.90 next year, setting off a complex chain reaction and a further downward spiral for oil and commodities. Daiwa fears a 20pc slide. My own view is that a fall of this magnitude would set off currency wars across Asia and beyond, replicating the 1998 crisis on a more dangerous scale.
- Pressures on China are clearly building up
- Capital outflows reached a record $113bn in November.
- This week's tweak to the "yuan fix" comes after trade data showed that Chinese exports stalled in November following a tentative rebound over recent months
- Shipments fell 6.8pc year-on-year, but what is most ominous is that the export tally included re-exports sales of refined oil products and a 22pc rise in steel sales.
There is much more at the article. AEP can be a bit of a worry-wart at times. But if the pace of yuan devaluation continues I think he on to something.