SCMP — Is China about to let the yuan weaken below seven to the dollar?

The CNY has already breached 7. The question now is whether China is ready to let drop stand, or even allow the currency float. This article provides background that most Western articles announcing the move don't. China has apparently decided to pursue its national interest rather than let the exchange rate dominate policy.

SCMP
Is China about to let the yuan weaken below seven to the dollar?

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Tyler Durden

The US is also putting the push on to destabilize China politically as well as economically.

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Tsvetana Paraskova — China Readies Yuan-Priced Crude Oil Benchmark Backed By Gold

The world’s top oil importer, China, is preparing to launch a crude oil futures contract denominated in Chinese yuan and convertible into gold, potentially creating the most important Asian oil benchmark and allowing oil exporters to bypass U.S.-dollar denominated benchmarks by trading in yuan, Nikkei Asian Review reports.

The crude oil futures will be the first commodity contract in China open to foreign investment funds, trading houses, and oil firms. The circumvention of U.S. dollar trade could allow oil exporters such as Russia and Iran, for example, to bypass U.S. sanctions by trading in yuan, according to Nikkei Asian Review. To make the yuan-denominated contract more attractive, China plans the yuan to be fully convertible in gold on the Shanghai and Hong Kong exchanges.… 

Looks like the rumors are turning out to be true.

China already runs fixed rate with the yuan pegged to the dollar. This would mean that the Chinese government would need to obtain gold rather than USD, but China is a major gold producer while the US has a monopoly on dollar issuance. More importantly, this system would bypass the financial system under US control that the US is using politically, including economic warfare.

Could a gold standard be coming back?

Oil Price
China Readies Yuan-Priced Crude Oil Benchmark Backed By Gold

Tsvetana Paraskova

UPDATE

Martin Armstrong points out that the proposed yuan-gold convertibility is not a fixed rate but at a floating rate, linked to the gold market.

You either PEG it to the dollar (unwise for political reasons) or you “LINK” it to gold – but do not PEG it to gold. If you attempt to PEGthe yuan to gold, that would fail for you are making the same mistake as Bretton Woods. The only possible way is to “LINK” it to gold but on a floating exchange rate. That way you are encouraging confidence in the yuan allowing it to be redeemed on a floating basis with gold. Hence, the political risk of the currency is reduced for it could become possible that the currency system breaks apart and politically currencies could be politically frozen and nonredeemable.

Armstrong Economics
Gold – Oil – Dollar
Martin Armstrong

Valeant...another disaster for Bill Ackman. What's with this guy? What's with all these guys?

Valeant shares are getting pummeled today. Hedge fund guy, Bill Ackman, was long a boatload. He's getting creamed.

That comes after his disaster with shorting Herbalife. That was a disaster even despite teh fact that he tried to get the government to intervene on his behalf and start an investigation into the company. (Sleaze.)

Then we find out he recently shorted the Chinese yuan because he thought there was going to be a "debt crisis" in China. Like, China would run out of yuan. The other idiot that did that was Kyle Bass, who keeps losing money in one fictitious debt crisis after another. (Remember the Japan debt crisis he predicted?)

What's wrong with these guys? Ackman, Bass, Einhorn, Gross...they all suck. They all do the same, wrong thing. They're all fucking clueless.

I should be managing billions. Maybe I suck at marketing. Yeah, I do.

Zero Hedge — De-Dollarization Continues: China-Argentina Agree Currency Swap, Will Trade In Yuan

Links (Reuters, Bloomberg) are provided on this one.

Zero Hedge
De-Dollarization Continues: China-Argentina Agree Currency Swap, Will Trade In Yuan

Tyler Durden

Getting the Chinese to raise their currency and bash ours down does not create manufacturing jobs

Illustrated very clearly in the chart below. The Chinese yuan appreciated 30% against the dollar since 2004 (when the Bush Administration started this China bashing policy). Since then, manufacturing jobs have fallen by 300,000.

Not only does this not work, it acts as a tax on the middle class and poor, who have to pay more for Chinese goods, when they were once a lot more affordable.

It's a really, really, stupid policy.