Zero Hedge — Something Just Broke In The Chinese Yuan

When is China going to follow Russia and float?

We argue that policymakers in China are now going to be more accepting of USD/CNY appreciation through 7: years of regulatory measures should make outflows more manageable, easier monetary policy will add upside pressure and a weakening FX is the natural means of offsetting tariffs....

Zero Hedge
Something Just Broke In The Chinese Yuan
Tyler Durden

Dean Baker — Does China's 2.5 Percent Inflation Rate Really Explain the Decline in the Value of Its Currency Against the Dollar?

The vast majority of economists believe that the Fed's asset holdings keep down U.S. interest rates. It is inconsistent to believe that the Fed's holdings of U.S. assets keep down interest rates here, but China's holding of foreign assets does not keep down the value of its currency.

Beat the Press
Does China's 2.5 Percent Inflation Rate Really Explain the Decline in the Value of Its Currency Against the Dollar?
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C

Zero Hedge — Caught On Tape: China's Currency Rigging

The "currency rigging" involves is China's supporting the peg rather than let the market break the peg by driving the RMB down.

China needs to float and let the RMB stabilize. Any devaluation will be one-off. 

Zero Hedge
Caught On Tape: China's Currency Rigging
Tyler Durden

Reuters — As yuan weakens, Chinese rush to open foreign currency accounts

Zhang Yuting lives and works in Shanghai, has only visited the United States once, and rarely needs to use foreign currency. But that hasn’t stopped the 29-year-old accountant from putting a slice of her bank savings into the greenback.

She is not alone. In the first 11 months of 2016, official figures show that foreign currency bank deposits owned by Chinese households rose by almost 32 percent, propelled by the yuan's recent fall to eight-year lows against the dollar.

The rapid rise - almost four times the growth rate for total deposits in the yuan and other currencies as recorded in central bank data – comes at a time when the yuan is under intense pressure from capital outflows. The outflows are partially a result of concerns that the yuan is going to weaken further as U.S. interest rates rise, and because of lingering concerns about the health of the Chinese economy.

Reuters
As yuan weakens, Chinese rush to open foreign currency accounts 

Winni Zhou and John Ruwitch | SHANGHAI

Eswar Prasad — Trump’s Chinese Scapegoat

A charitable interpretation is that, as a tough and pragmatic businessman, Trump is simply using threats to stake out a strong bargaining position, and that sense and reason will ultimately prevail. But the longer Trump’s incendiary rhetoric continues, the higher the risk that it will produce real-world consequences....

Project Syndicate
Trump’s Chinese Scapegoat

Eswar Prasad | Professor of Trade Policy at the Dyson School of Applied Economics and Management, Cornell University, senior fellow at the Brookings Institution, and author of Gaining Currency: The Rise of the Renminbi