The Real China Syndrom

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BungeeBones's picture
BungeeBones
Status: Bronze Member (Offline)
Joined: Oct 2 2009
Posts: 38
The Real China Syndrom

You know how you can be looking at something and never see it? Or how you know something but other events come into your mind and push something out?

 

Well I was looking at the currency charts like I always do; watching the FRN slide into perhaps oblivion. I was looking at the part of the currency chart that showed the percentage change of the listed currency as it related to the dollar. This day, they were all positive except one. But in among the crowd was one report that jumped off the screen at me. It was the report that China's Yuan had not changed in relation to the dollar.

 

Now we all know the Yuan is pegged to the dollar and it's one of those things we know so we don't talk about it - everyday. But perhaps call me blinded but I just realized athat as the FRN slides into oblivion so to will the YUAN?

 

What the h--- is going on with that? There is no honest reason for the Chinese to be doing that. That chart makes it look like a life or death economic struggle between China nad the US with the rest of the world's currencyu blowing in whatever direction the wind blows.

It's there every day,but a shock none the less. A sure case of the frog in the pot on the stove. Is it getting hot in here or is it me?

 

BungeeBones's picture
BungeeBones
Status: Bronze Member (Offline)
Joined: Oct 2 2009
Posts: 38
Re: The Real China Syndrom

More evidence fresh off the presses:

 

Banks step in as dollar tumbles

Dollars

Asian central banks have intervened in the currency markets in an attempt to slow the slide of the US dollar

 

 

http://news.bbc.co.uk/2/hi/business/8298037.stm

Farmer Brown's picture
Farmer Brown
Status: Martenson Brigade Member (Offline)
Joined: Nov 23 2008
Posts: 1503
Re: The Real China Syndrom

Bungee,

The Chinese are in the same predicament as our other trade partners: as the dollar goes, so does their export industry.  In the case of China, that's pretty much the basis of their economy.  There must be a limit to how low our trade partners will allow the dollar to fall.  The Chinese simply peg their currency to the dollar, but the Yuan is not part of the US$ index.  How long before the Europeans, the Japanese (no matter what they claim about wanting to let their currency appreciate), and the others cave in and support Uncle Buck?  Not very long is my guess, and it may have already started:  Asia steps in to support dollar

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