Commodity Trade Mantra

Posts Tagged ‘PBOC’

China Stands Ready to Re-Inflate Bubble: Michael Kosowan

Will China, the “engine” of the world’s great economic machine, come chugging to a halt? Not likely. In the weeks ahead, China is likely to experiment with cutting interest rates and further devaluing its currency in order to stabilize the stock market. They may shuttle the bad debt off to warehouse-like institutions while they re-inflate their markets.

Is China Quietly Targeting A 20% Yuan Devaluation?

Some Chinese agencies involved in economic affairs are assuming a much weaker yuan both over the near- and medium-term. Those projections, which suggest a depreciation of over 8% by Dec. 31 & about 20% by end of 2016, were adopted after the currency was devalued this month & compare with analysts’ forecasts for the yuan to reach 6.5 to the dollar by the end of this year.

China Injects Hundreds Of Billions In Liquidity To Offset Yuan Intervention

The PBoC injected CNY120 billion via 7-day reverse repos on Tuesday – that was triple the CNY40 billion injected late last week & CNY110 billion yuan in 14 banks today. As such, China resorted to devaluation but because the market expects the yuan to ultimately weaken by around 10%, the PBoC has been forced to manage expectations by supporting the yuan.

Chinese Devaluation Extends To 3rd Day - Yuan Hits 4 Year Low

Having devalued the Yuan fix by 3.5% in the last 2 days, China did it again, shifting Yuan to 4 year lows. While confusion reigns over why PBOC would intervene at the close to strengthen the Yuan last night, the reality is the commitment isn’t to a devaluation for China’s exports, but its actions are directed toward trying to keep the wholesale finance interfaces somewhat orderly.

After The Chinese Currency Devaluation, Who's Next?

On a broader level, the currency devaluation signals PBOC’s eagerness to join the global currency wars. With the competitive currency devaluation by various central banks gaining momentum but global trade slowing, the latest CNY devaluation could be seen as likely to force other central banks to consider similar measures before long.

China Loses Battle Over Yuan - The Real Global Currency War Begins

Now that China is openly exporting deflation & is eager to risk massive capital outflows, the global currency war just entered its final phase, one where the global race to the bottom is every central bank’s stated goal. We give Yellen a few months before the US too is back to ZIRP, maybe NIRP and certainly monetizing even more things that are not nailed down.

Gold Soars After Chinese Currency Devaluation

Over one billion Chinese will soon be scrambling into gold to preserve their purchasing power after the PBOC’s dramatic devaluation announcement. Any day now the PBOC will update its revised foreign reserve and gold holdings. And so the next big leg up in gold will take place when it is revealed that the PBOC had only exposed a portion of its “new” total gold inventory.

Did China Reveal a Fraction of its Gold Holdings? - The Case Of China’s Missing Gold

Having large gold reserves are not required to be in the SDR. China had to wait until its stock market was crashing to present the “systemic stability” bazooka: Gold. Because in revealing a surge in its gold holdings, the PBOC is hoping to finally provide that final missing link that will boost investor sentiment, and get people buying stocks all over again.

Copper Crashes, In Danger Of Breaching 15-Year Support Level

Will the PBOC step in to also rescue copper, or will the last remaining indicator of global economic health (or lack thereof) be left to fend for itself and be the latest confirmation that excluding central bank support of all stocks around the globe, the world is now gripped by an unprecedented economic depression.

China Creates World's Largest Physical Gold Investment Fund For Central Banks

China’s new international gold fund expects to raise 100 billion yuan or $16 billion. About 60 countries have invested in the fund, which will in turn facilitate gold purchase for the central banks of member states to increase their gold holdings. The new project marks another step forward in the internationalisation of the Yuan.

PBOC Gold Purchases: Separating Facts from Speculation

PBOC buys gold with their foreign exchange reserves than with renminbi – China’s FX reserves are worth about $3.7 trillion & mostly held in USD. Gold on SGE is quoted in renminbi, so PBOC can’t exchange USD with gold there. PBOC is likely to buy gold abroad & these purchases should be added to the visible gold flows.

China's Massive Debt Problem Is About Get Much Massiver

PBOC has announced that regulatory approval will no longer be required to issue ABS. Market players now expect ABS issuance to more than triple to 1 trillion yuan ($161 billion) this year. This means China’s massive debt burden is about to get massiv-er, as banks use ABS issuance as a pressure valve to free up lending capacity.

China’s Stealth Gold Reserves To Quadruple as IMF Seek Answers

Bloomberg speculates that PBOC may have increased its gold reserves 3 fold since 2009 to over 3,000 tonnes. China would therefore have the 3rd largest gold reserves in the world, second only to U.S. & Germany. China’s ambition to make the yuan a dominant, if not the dominant reserve currency is now beyond dispute.

The Market is Simply not Expecting Renminbi Devaluation to Happen

The Chinese seem to have changed the focus of their monetary policy from one that targets the exchange rate to one that targets domestic money supply growth. This shift will only serve to increase the divergence between the Fed and PBOC monetary policies and put more downward pressure on the renminbi.

China Cuts Interest Rates - 21 Central Bank Easings In 2015 Till Now

The decision to cut benchmark interest rates again has been widely expected by the market. There was also some speculation that the deposit rate ceiling would be increased. The cut to the benchmark lending rate is also smaller than the last cut in November (40 bps). This may make some observers view the move as cautious.

A Close Look At The Chinese Gold Lease Market

Current participants in the gold lease market are commercial banks, gold miners and jewelers. The Shanghai Gold Exchange also provides a crucial role in gold leasing. The SGE’s block trading system is the trading platform used by gold leasing participants; the SGE also provides transfer and settlement services.

Currency Wars Reignite As Yuan Tumbles Most In 2 Months

Did China just re-enter the currency wars? The Chinese Yuan dropped 0.29% overnight – its biggest drop since September and 2nd biggest devaluation since March – as the currency tumbles back in line with the PBOC’s fixing for the first time in over 3 months. China’s huge corporate debt market also appears to be freezing.

China will Dominate the Gold Market

China is now at the center of the global gold market – the engine driving the shift from West-to-East in terms of wealth creation, economic growth and gold production and consumption. A pro-gold culture, consistent economic growth and a supportive government, suggest that there is also significant room for further growth.

China Launches CNY500 Billion In "Stealth QE"

Will the PBOC’s Short-term Lending Facility (SLF) evolve into China’s version of QE? While investor attention has been fixated on China’s deteriorating PMI reports and fears of a widening credit crisis, China’s central bank is operating behind the scenes to prevent a wide-scale financial panic.

What's Behind The Sudden Ignorance Of Geopolitical Risk By Gold

Gold is trading below where it was when the Russians first dipped their toes in Ukraine to test the water. The question for all of the investors, traders & analysts is the same: Why? The last time the world faced a meaningful threat of a large-scale conflict between East and West, the gold price soared. This time it hasn’t moved. Why?

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