Currency Wars Turning to Real Warfare?
CrushTheStreet.com
August 14, 2015
Currency Wars Back in Full Swing
On Monday it was revealed that China devalued their yuan currency a record 1.9%, bolstering their export industry which had been faltering recently, in part due to their currency’s strength. Exports fell 8.3% year over year in July, though only down 0.9% in yuan terms.
The yuan fell in trading the most in a day since 1994 after the news. Though the People’s Bank of China called this a one-time adjustment, but on Wednesday morning in China the PBOC devalued again by 1.6%. The currency continued to plunge. Thursday we learned that the country’s central bank had pushed their currency lower for an unprecedented 3 days in a row at 4.4%. The IMF welcomed China’s devaluation as it said it is moving toward letting free market forces determine the currency’s value.
Rather than watch their wealth get frittered away, middle and upper class Chinese will probably throw their money into housing and other asset trophies into US, Canada, Australia and New Zealand markets. It’s just a matter of time before we see the Federal Reserve respond overtly or covertly to start more QE programs or declare a new depression as a reason to keep interest rates at zero or even turn them negative as Andy Hoffman is anticipating.
John Kerry, our Secretary of State has actually come out and said that the US Dollar could cease to be the world reserve currency, in fact he said this is already ‘bubbling out there,’ for example if the US doesn’t pass the Iran Nuclear deal.
Finally, it seems after China’s official gold holdings update in June which increased their holdings about 60% to 1,658 tons, they’ve updated their holdings in July already by 1.5%. As TFMetals Reports, the Bank of China will update monthly on holdings; perhaps we’ll see this steady increase month to month which could lead to the IMF’s inclusion of the yuan in the SDR basket which has seems to have been delayed 9 months now until September 2016.
US Markets Show Weakness
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