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Tag Archives: rmb

The Contingent Hole In China’s Brazil Dollar Strategy

The Brazil strategy isn’t, of course, truly Brazilian. Like the Spanish flu which became famous for where it was first noticed and reported rather than where it originated, this monetary policy was thought up elsewhere and Banco do Brasil is merely the central bank which decided it was worth sharing.What is this Brazil (my term, by the way) policy? “Contingent liabilities.” A well known advantage of issuing such contingent liabilities as currency swaps is that authorities become able to...

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Xi Has Upped His (Ruthless) Game; Dollar Scarcity, Chinese Economy, and the World Surrounding All of It

There’s one key piece of the “petroyuan” story which has gotten lost in the frenzied hype. While many get fixated, and make others fixate, on how RMB-for-oil was going to, or maybe even still will, destroy the dollar there’s been important, legitimate functions for Shanghai’s International Exchange which don’t involve, and never really did, replacing the reserve currency. It’s all about dollar burden, lightening the monetary load in a reserve system that doesn’t supply enough of it (nor...

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Not This Again: Time For Petroyuan Revisit

Does anyone remember the petroyuan? It doesn’t appear so, though not because the thing disappeared rather due to the fact that it didn’t. It was a really big deal for a time, pretty much all of 2018. What it was supposed to have represented was the dollar’s death knell. Guaranteed, one hundred, no, one thousand percent dead. This was widely reported more than a few times as fact, a perfectly frenetic parallel to the related inflation hysteria then raging. Right from the start of 2018, we...

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What’s In The Same Number? China’s Part In The (euro)Dollar Story

There’s one part of the dollar story I’ve not yet touched on recently. We’ve already heard, too much, about how the Fed’s killing the dollar, or at least is aiming to with all its immense money printing fire power. While it’s the euro which has demanded so much from DXY that it almost seems plausible (to a few) this time, what’s the real big one still lurking out there have to say about all this?CNY.According to the People’s Bank of China (PBOC), the balance of foreign assets reported on...

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How Do You Say (Way) Off-balance Sheet In Chinese?

Where central banks are concerned, it’s not conspiracy theory so much as the term “off-balance sheet.” There’s a reason Enron kicked off that mass-migration into the footnotes. For monetary officials, there’s the choice to be like Montagu Norman and what he thought of good practice at central banks. Silence.For years, the Chinese have tried it the other way. Big Mama typically left huge muddy footprints wherever its clumsy feet might land. It certainly was that way back in 2015 when Euro$...

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What’s *Really* Going On In China?

Questioning the veracity of Chinese estimates (for anything) has always been something of an amateur sport. For a stat like real GDP, everyone “knows” that it is managed. In a complex world where an economic system for a billion and a half is incomprehensibly unpredictable, there’s really no other way to always hit your government’s mark (unless the Chinese are using the same accountants and corporate managers who likewise manage to “beat” their quarterly EPS by $0.01 every time).The world...

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PBOC’s Got A Lot To Juggle

While China’s coronavirus outbreak dominates Western media attention, the Chinese economy has been off for its Golden Week New Year celebrations. Unfortunate timing, to say the least. While global markets have been digesting the latest developments, domestic markets in China have been closed. Nobody really knows how they will reopen on Monday. As a consequence, the People’s Bank of China has asked for calm. Standard practice facing a crisis, the central bank has already preannounced that it...

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China’s Financial Stability: A Squeeze and a Strangle

I do get a big kick out of the way Communists over in China announce how they are dealing with their enormous problems especially as they may be getting worse. Each month, for example, the country’s National Bureau of Statistics (NBS) will publish figures on retail sales or industrial production at record lows but in the opening paragraphs the text will be full of praise for how the economy is being handled. If you thought the Western media was liberal with the word “strong” (经济强劲, I...

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The Fed and PBOC: Joined At The Zoo

The Federal Reserve wasn’t the only major central bank conducting open market operations (OMO’s) this week. On the other side of the Pacific, the People’s Bank of China (PBOC) had been, too. Big ones. And in both places, nobody really seems to know what to make of them even though they are actually connected to the same offshore dollar problem. Increasingly illiquid markets and more active central banks. The latter doesn’t fix the former, it’s an advertisement. How's it going in repo?...

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China Nastier Number Four

Officials in China seem to be taking a page out of Mario Draghi’s playbook. Before Europe was pushed to the bring of recession, the President of Europe’s central bank would downplay any weakness in the European economy. In 2018 especially, Draghi frequently referred to 2017 as if it was something special. No cause for concern, he reassured, any softening was just the Continent slowing down from really awesome growth. With the ECB restarting QE last month, he hasn’t used that reference in some...

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