{"id":10881,"date":"2015-08-11T07:06:53","date_gmt":"2015-08-11T12:06:53","guid":{"rendered":"http:\/\/olduvai.ca\/?p=10881"},"modified":"2015-08-11T07:06:53","modified_gmt":"2015-08-11T12:06:53","slug":"peoples-bank-of-china-freaks-out-devalues-yuan-by-record-amount-vows-to-severely-punish-capital-flight","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=10881","title":{"rendered":"People\u2019s Bank of China Freaks Out, Devalues Yuan by Record Amount, Vows to \u201cSeverely Punish\u201d Capital Flight"},"content":{"rendered":"<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2015\/08\/11\/peoples-bank-of-china-pboc-freaks-out-devalues-yuan-by-record-amount-vows-to-severely-punish-capital-flight\/\" target=\"_blank\">People\u2019s Bank of China Freaks Out, Devalues Yuan by Record Amount, Vows to \u201cSeverely Punish\u201d Capital Flight<\/a><\/h3>\n<p>Everything has started to go wrong in the Chinese economy despite its mind-bending growth rate of 7%. Exports plunged and imports too. Sales in the world\u2019s largest auto market suddenly are shrinking just when overcapacity is ballooning. The property market is quaking. Electricity consumption, producer prices, and other indicators are deteriorating. Capital is fleeing. The\u00a0hard landing is getting rougher by the day. But Tuesday morning, the People\u2019s Bank of China pulled the ripcord.<\/p>\n<p>In a big way.<\/p>\n<p>It lowered the yuan\u2019s daily reference rate by a record 1.9%. The yuan plunged instantly, and after a brief bounce, continued to plunge. Now, as I\u2019m writing this, it is trading in Shanghai at 6.322 to the dollar, down 1.8% from before the announcement. A record one-day drop.<\/p>\n<p>The PBOC had kept the yuan stable against the dollar. As the dollar has risen against other major currencies, the yuan followed in lockstep. Over the past week, the Yuan\u2019s closing levels in Shanghai were limited to vacillating between 6.2096 and 6.2097 against the dollar. Over the past month, daily moves were limited to a maximum 0.01%. The PBOC controls its currency with an iron fist.<\/p>\n<p>Hence the shock to the currency war system.<\/p>\n<p>The Nikkei, beneficiary of the most aggressive currency warrior out there, had been up, nearly kissing the magic\u00a021,000 at the open for the first time in a generation, but plunged 200 points\u00a0in one fell swoop when the news hit. Then the Bank of Japan jumped in with its endless supply of freshly printed yen, furiously buying Japanese ETF to stem the loss. The lunch break put a stop to all this. Then\u00a0the Nikkei plunged again. Maybe the folks at the BOJ were late getting back to their trading stations. But now they\u2019re back at work, mopping up ETFs.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>People\u2019s Bank of China Freaks Out, Devalues Yuan by Record Amount, Vows to \u201cSeverely Punish\u201d Capital Flight Everything has started to go wrong in the Chinese economy despite its mind-bending growth rate of 7%. Exports plunged and imports too. Sales in the world\u2019s largest auto market suddenly are shrinking just when overcapacity is ballooning. The [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[57,7976,130,6941,1099,1784,2520,7978,2914,7977,4254,4255,1031],"class_list":["post-10881","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-of-japan","tag-capital-flight","tag-china","tag-chinese-stock-market","tag-currency-devaluation","tag-exports","tag-imports","tag-kikkei","tag-pboc","tag-peooples-bank-of-china","tag-wolf-richter","tag-wolfstreet","tag-yuan"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10881","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10881"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10881\/revisions"}],"predecessor-version":[{"id":10882,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10881\/revisions\/10882"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10881"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10881"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10881"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}