Topic: China tells state banks to prepare for a massive dollar dump (Read 289 times)

Aren´t their economic difficulties self-inflicted at least to some degree?

I imagine that their very restrictive corona measures (e.g. locking down entire cities
like Shanghai for weeks) have harmed the local economy.

I think China is really experiencing a difficult time now that time look very tough and the country economy seems to be falling.
...

In the long run, this is a good thing. Especially for Bitcoin. China becomes less reliant on the US, the US becomes less reliant on China. We all stop trying to politically control each other and China can keep on quietly torturing, enslaving, killing and organ-harvesting the "unwanted" peoples of their population.

If rather it's not China trying to dump the dollar they're trying to find a way to save their yuan, avoid letting it drop too deeply, seriously affecting the national economy. Japan and other countries are also planning to find solutions to prevent the devaluation of their national currencies to avoid creating a serious economic crisis in their countries.

The dollar is at a 20-year high and this is good for the US but for the countries that are borrowing money from the US, which depend on the US, they are having a hard time repaying the US government and do business with America.

I believe that they are going to be forced to sell dollars eventually, what are you going to do with trillions of dollars that you can't use, and still have a financial break in your nation? We have seen the huge real estate bubble bursting in China just a year ago, and that means they need to get some more yuan, and value their own money a bit more in order to protect its citizens.

USA should start to move their manufacturing to other places gradually as a response to make sure that nobody has a lot of dollar to devalue it whenever they want to. If you are dependent on just one nation to build everything for you, then you are going to eventually lose its value.

Although, isn't China still one of the largest HODLers of United State debt, and U.S. Dollars? Why would they start dumping an asset that they are largely exposed to, and crash the price of that asset? Do they truly want to crash the currency of U.S. economy, the largest importer of their exports?

The exchange rate charts don't show any major change though.

In any case, if you look at the act alone this conclusion (strengthen their currency) makes sense and it may very well be one of the motivations; but I believe there is a bigger picture here. China is not doing ONLY that, there is a lot of other steps they are taking. Like the ones I listed, and I clearly see a trend.

Depends on the goal, short term it could be a good plan but we don't know what's going to be the result of it in the future. It's hard to guess and time what will happen to the economy of China but with what they've been doing, my opinion is that they're really trying to be on top of everything in the next couple years. China is still one of the huge source for most products and labor, they've got the manufacturers inside them and that's one factor that they can sustain themselves and if they do a massive dump for the dollar, it's okay because they're trying to be unreliant to it.

If we are in crypto where do you suggest buying Yuan? I was hoping to actaully get some RMB or Yuan stablecoin but there is none even the p2p in binance.

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I misunderstood China's intentions, but stompix posted a very good point on why China is preparing for a "massive U.S. Dollar dump". It's just to prop up it's own currency, the Yuan.

Perhaps the Fed's tightening to stop, and reverse inflation in the country is having a negative effect from China's point of view. Because through a strong Dollar, and from China's point of view, it might be that inflation is also being exported to them. Haha.

Good questions and I'm afraid we will have a better answer for them in the future. For now it is worth knowing that China has been slowly pulling out of US economy for months now. A large number of businesses already left US, a lot of Chinese companies pulled out of US stock exchange and investors also pulled their money out.

It is also worth knowing that if they go ahead with the plans to bring Taiwan back to China, most probably US is going to do the same they did to Russia which is to sanction them! In which case US will no longer be "largest importer of their exports" and the incentive to baghold USD is no longer there for the Chinese.

Would anyone here recommend selling the US dollar to buy the chinese yuan?

Would anyone here recommend selling the US dollar to buy the chinese yuan?

Would anyone here recommend selling the US dollar to buy the chinese yuan?

If you dumped assets to fund purchasing something today. What would it be?

Good questions and I'm afraid we will have a better answer for them in the future. For now it is worth knowing that China has been slowly pulling out of US economy for months now. A large number of businesses already left US, a lot of Chinese companies pulled out of US stock exchange and investors also pulled their money out.

It is also worth knowing that if they go ahead with the plans to bring Taiwan back to China, most probably US is going to do the same they did to Russia which is to sanction them! In which case US will no longer be "largest importer of their exports" and the incentive to baghold USD is no longer there for the Chinese.

Although, isn't China still one of the largest HODLers of United State debt, and U.S. Dollars? Why would they start dumping an asset that they are largely exposed to, and crash the price of that asset? Do they truly want to crash the currency of U.S. economy, the largest importer of their exports?

Why would they start dumping an asset that they are largely exposed to, and crash the price of that asset? Do they truly want to crash the currency of U.S. economy, the largest importer of their exports?

Reuters reported that China told state-owned banks to get ready to sell dollars and buy yuan in an effort to prop up the local currency.

On Thursday, the yuan fell 0.9% to 7.1340 against the dollar and is on track for its worst annual decline since 1994, having lost more than 11% so far this year. Earlier this week, China's offshore yuan this week depreciated to a record-low against the greenback, and its domestic unit fell to its weakest level since the 2008 financial crisis.

It appears china is dumping the US dollar to buy more of their own native currency the yuan.
This approach contrasts sharply with china's past strategy of devaluing the yuan to boost chinese exports.

18 Apr 2022  China auctions 502,900 mt of soybean imports from reserves
On May 07, 2022 China to auction 314,000 tons of imported soybeans
Sep 29, 2022 China would auction off 500,000 MT of imported soybeans from state-owned reserves

Pork costs in China, the world’s biggest consumer, rose an average of 22.5% last month
https://www.theguardian.com/world/2022/sep/13/chinese-pork-prices-surge-to-new-high-prompting-authorities-to-act

Would anyone here recommend selling the US dollar to buy the chinese yuan?

Would anyone here recommend selling the US dollar to buy the chinese yuan?

This approach contrasts sharply with china's past strategy of devaluing the yuan to boost chinese exports.

Would anyone here recommend selling the US dollar to buy the chinese yuan?

• Reuters reported that China told state-owned banks to get ready to sell dollars and buy yuan in an effort to prop up the local currency.
• The move could stem the yuan's fall, as it remains on track for its largest annual loss against the dollar since 1994.
• A hawkish Fed has pushed the dollar to 20-year highs this year, pressuring currencies around the world.

The People's Bank of China has told major state-run banks to prepare to shed dollar holdings while snapping up offshore yuan, which has continued to fall despite prior interventions, sources told Reuters.

The scale of this latest effort to prop up the yuan will be big and could provide a floor to the Chinese currency, according to the report.

The amount of dollars to be sold hasn't been decided yet, but Reuters said it will primarily involve the state banks' currency reserves. Their offshore branches, including those based in Hong Kong, New York and London, were ordered to review offshore yuan holdings and check to see that dollar reserves are ready.

On Thursday, the yuan fell 0.9% to 7.1340 against the dollar and is on track for its worst annual decline since 1994, having lost more than 11% so far this year. Earlier this week, China's offshore yuan this week depreciated to a record-low against the greenback, and its domestic unit fell to its weakest level since the 2008 financial crisis.

The Federal Reserve's hawkish policy path has bolstered the dollar to 20-year highs this year, putting pressure on other central banks and triggering a "reverse currency war."

While a weaker currency can sometimes be beneficial, as it means exports get cheaper, the yuan's recent decline below the psychological threshold of 7-per-dollar has raised concerns.

The People's Bank of China has consistently imposed a strong bias to its currency reference rate to help support the yuan. Central bank officials have also issued verbal warnings against speculating on the yuan and increased the cost of shorting the currency.

But it has refrained from raising benchmark rates and instead has been easing them in an effort to spark growth in an economy that's been dragged down by COVID-19 lockdowns, a real estate crash, and supply chain snags.

https://markets.businessinsider.com/news/currencies/china-bank-dollar-yuan-currency-markets-economy-beijing-fed-hike-2022-9