This tag is associated with 86 posts

When Currency Pegs Break, Global Dominoes Fall

By Charles Hugh Smith When a currency peg breaks, it unleashes shock waves of uncertainty and repricing that hit the global financial system like a tsunami. The U.S. dollar has risen by more than 35% against other major trading currencies since mid-2014: If all currencies floated freely on the global foreign exchange (FX) market, this … Continue reading

Why The Chinese Yuan Will Lose 30% Of Its Value

By Charles Hugh Smith The stark truth is nobody wants yuan any more. The U.S. dollar (USD) has gained over 35% against major currencies since 2011. China’s government has pegged its currency, the yuan (renminbi) to the USD for many years. Until mid-2005, the yuan was pegged at about 8.3 to the dollar. After numerous complaints … Continue reading

China Explores Its Monetary Easing Toolkit

By Kangning Chen The People’s Bank of China (PBoC) has flooded China’s financial system with record amounts of cash this past week to pre-empt the annual liquidity crunch ahead of the Lunar New Year in early February. The central bank is cautiously refraining from cutting interest rates or the reserve requirement ratio (RRR), as it … Continue reading

Currency Dictatorship — The Struggle To End U.S. Dollar Hegemony

By Rakesh Krishan Simha India and the BRICS are giving the US dollar the boot? Is it really so? The last time a country decided to dump the dollar in the oil business, the US destroyed it. Now India, the world’s third largest economy, and Iran have agreed to settle their outstanding oil dues in … Continue reading

Get Used To Living With Chinese Economic Tremors

By Peter Drysdale The economic tremors that accompanied the New Year falls in the Chinese stock market have spooked markets and policymakers around the world. Get used to it. China’s now big enough to matter in markets everywhere. In terms of its share of global output, global growth of GDP and commodities markets, China matters … Continue reading

China’s Deep Economic Malaise

By Peter Symonds The upheavals in global share markets since the beginning of the year have focussed attention on China amid fears that the slump in its stock markets and the falling renminbi (yuan) are symptoms of a far deeper economic malaise. The slowdown of the Chinese economy, which is exposing massive overcapacity in industry … Continue reading

The China Syndrome: The Coming Global Financial Meltdown

By Charles Hugh Smith All the phantom wealth piled up in China’s boost phase is now melting down, and the China Syndrome will trigger a meltdown in global phantom assets. The 1979 film The China Syndrome took its name from the darkly humorous notion that a nuclear reactor meltdown in the U.S. would burn straight through the Earth to … Continue reading

Brent Crude Crashes To April 2004 Low Following China Market Crash, Devaluation

Brent crude prices came crashing down on Thursday, falling over 4 percent to the lowest level seen since April 2004, following a rocky session in Asia after China accelerated the pace of the devaluation of its currency which drove its markets into a tailspin as shares plunged over 7 percent and triggered circuit breakers to kick in and … Continue reading

China Halts Trading For 2nd Time This Week As Shares Crash 7% Following Yuan Devaluation

China halted the day’s trading after only 29 minutes of opening on Thursday morning as shares crashed by over 7 percent — thus triggering an automatic circuit breaker — as authorities accelerated the devaluation of the Chinese yuan. China’s recently installed circuit breaker mechanism paused trading for 15 minutes after the CSI300 index fell 5 percent in the first 13 minutes of trading. Upon resumption … Continue reading

Opinion Is Divided On State Of Chinese Economy, But Not On Its Importance

It is difficult to gauge true fragility of China, but economists agree it will have profound impact on the rest of the world in 2016. By Heather Stewart It was perhaps fitting that China’s latest lacklustre industrial survey was the first fragment of financial data to greet the new year. Economists are divided about the risks … Continue reading

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