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Beijing's talk about "internationalization" of the yuan may be a bluff, contends Izabella...

  • Wednesday, May 16, 2012, 10:50 AM ET
    Beijing's talk about "internationalization" of the yuan may be a bluff, contends Izabella Kaminska, designed to maintain the illusion of China as a good investment destination, not an economy on the brink of collapse. Markets are calling, accelerating capital outflow from the country and pricing in continued depreciation of the yuan over the next year.
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    One year ago the USD/CNY was above 6.50. Now it is at 6.32, very close to all time strong for the CNY. So, the CNY has become stronger over time and ''continued depreciation'' is factually incorrect as we've seen continued strengthening. Of course, we may see it weaken going forward but the $ is not a pretty picture either with the new debt ceiling talks coming soon for a revisit of last year's charade.
    16 May 2012, 11:03 AM Reply Like
  •  
    That tough-talking "Markets are calling, accelerating capital outflow from the country..." was pretty comical, and I needed a laugh today after what happened to VELT. One has an image of Mr. Market, chomping on his stogie, in a smoke-filled opium den, looking up over his cards, at the pot.

    The Chinese authorities are hardly going to lose sleep over trends that slow down, or even reverse, the yuan appreciation. And, if they did worry about it, they would have only to divert a little of the usual net flow of funds towards US$ treasuries, into their own stock market or other domestic investments, using whatever covers and channels a Communist party uses to do such things. Sheesh.
    17 May 2012, 12:52 AM Reply Like
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