http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/ Chinese Dual Monetary Policy The People’s Bank of China is walking a tightrope in finding a solution for the country’s currency. The Chinese dual monetary policy attempts to let the Yuan appreciate against the dollar in order to stem cash outflows. And it attempts to let the Yuan fall versus other currencies in the region in order to make Chinese exports more competitive. Bloomberg News has more to say about the Yuan’s dual-moves policy. The Chinese central bank’s appetite for trade-weighted weakness in the yuan appears to be increasing, according to Australia & New Zealand Banking Group Ltd., spurring warnings of increasing risks to emerging-market currencies. A Bloomberg replica of the CFETS RMB Index, which tracks the yuan against 13 exchange rates, fell to a 16-month low of 97.8 on Wednesday, prompting ANZ to comment on whether the People’s Bank of China has set a bottom for declines. The authority is engineering the yuan’s weakness against the basket, which will allow the index to test 97, Credit Suisse Group AG analysts wrote in a note on Wednesday. His comments come amid speculation that the PBOC is following a dual strategy of allowing appreciation against the dollar to curb outflows, while guiding a decline against trading partners to help revive exports. Obviously this strategy only works so long as the USD is in a slow decline due to the Fed holding off on raising interest rates. When the dollar rebounds the Yuan will fall and outflows will increase. If the Chinese central bank responds by strengthening the Yuan they will become less competitive against other producers in emerging markets. Is the Fed Buying Time for China? CNBC writes that the Fed may be buying time for China with its decision to slow interest rate increases.

1. By www.ForexConspiracyReport.com

2. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
The People’s Bank of China is
walking a tightrope in finding a
solution for the country’s currency.

3. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
The Chinese dual monetary policy
attempts to let the Yuan appreciate
against the dollar in order to stem
cash outflows.

4. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
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5. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
And it attempts to let the Yuan fall
versus other currencies in the
region in order to make Chinese
exports more competitive

6. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
Bloomberg News has more to say
about the Yuan’s dual-moves
policy.

7. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
The Chinese central bank’s appetite
for trade-weighted weakness in the
yuan appears to be increasing,
according to Australia & New
Zealand Banking Group Ltd.,
spurring warnings of increasing
risks to emerging-market currencies.

8. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
A Bloomberg replica of the CFETS
RMB Index, which tracks the yuan
against 13 exchange rates, fell to a
16-month low of 97.8 on
Wednesday, prompting ANZ to
comment on whether the People’s
Bank of China has set a bottom for
declines.

9. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
The authority is engineering the
yuan’s weakness against the
basket, which will allow the index to
test 97, Credit Suisse Group AG
analysts wrote in a note on
Wednesday.

10. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
His comments come amid
speculation that the PBOC is
following a dual strategy of allowing
appreciation against the dollar to
curb outflows, while guiding a
decline against trading partners to
help revive exports.

11. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
Obviously this strategy only works
so long as the USD is in a slow
decline due to the Fed holding off
on raising interest rates.

12. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
When the dollar rebounds the Yuan
will fall and outflows will increase.

13. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
If the Chinese central bank
responds by strengthening the
Yuan they will become less
competitive against other producers
in emerging markets.

14. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
Is the Fed Buying Time for
China?

15. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
CNBC writes that the Fed may
be buying time for China with its
decision to slow interest rate
increases.

16. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
Global risk markets may have a
reprieve from China-related shocks
now that the Fed is clearly focusing
on overseas headwinds.

17. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
Stocks tumbled in August and early
January after China sharply
weakened its currency peg against
the dollar, raising concerns it would
further devalue the yuan and trigger
a significant economic slowdown.

18. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
Now, some analysts say Federal
Reserve Chair Janet Yellen’s
dovishness gives the world’s
second-largest economy breathing
room to progress on its economic
and currency policies

19. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
at least until the second half of the
year, when another rate rise is
possible.

20. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
The Fed seems to be extending its
mandate to include the stability of
global markets.

21. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
The hope seems to be that China
will demonstrate that it has its
economic adjustment under control
before the Fed is forced by inflation
fears to raise rates again.

22. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
Big Enough to Cause
Trouble

23. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
The fact of the matter is that China
has gotten big enough economically
to cause trouble when it
mismanages its economy and or
currency.

24. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
The first sign that the Chinese dual
monetary policy may be succeeding
is that China foreign-exchange
reserves are up for the first time in
5 months according to The Wall
Street Journal.

25. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
China’s foreign-currency reserves
rose during March, the first increase
in five months, a sign Beijing may
have partially succeeded in
stemming heavy capital outflows
that destabilized global markets
earlier this year and encouraged
some investors to bet big against the
yuan.

26. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
China’s foreign-currency holdings
rose to $3.213 trillion at the end of
March, up by $10.26 billion from the
end of February, according to data
from the People’s Bank of China.

27. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
The relative weakness of the dollar
has helped give China some
breathing space.

28. http://www.forexconspiracyreport.com/chinese-dual-monetary-policy/
But the dual monetary policy alone
will only work so long as the Fed
calls the tune as the defender of
last resort of global markets.