China Struggles to Steady Yuan’s Decline

The Euro is going down as well. 1.065 to the dollar. Last Summer it was 1.30.
China has been dumping US bonds for the last several months. Was that to stabilize their yuan as opposed to the lack of confidence in the dollar ?
 
ironchef said:
Good points.

Let's see, from 2012 valuation peak of 6 Yuan to 1 dollar to today, 6.9 Yuan to a dollar, a depreciation of 15%. For the Japanese Yen, its valuation peaked around the same time @ 75 to 1 dollar to today of 112 to 1 dollar, a depreciation of 49%. Could the Japanese Yen be more a symptom of capital flight and instability than the Yuan? If not what are the underlying differences?

Thanks.
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Well, firstly, it's better to look at all these things in trade-weighted terms. For the Yuan, we would observe arnd 9.5% depreciation from the 2015 peak. For the yen, it's more like 23.5% from the 2012 peak. And yes, you could argue that, at some point, the depreciation of the yen could signal something sinister for Japan, so it needs to be observed carefully. On the other hand, you could also argue that the appreciation which occurred between 2008 and 2012 was never warranted by the fundamentals in the first place.
 
Elena Holodny ‏@elenaholodny 4h4 hours ago


The rise and fall of the yuan, 2000-2016. http://www.businessinsider.com/china-yuan-timeline-16-years-2016-12…

C0NOKYyWIAA_el6.jpg
 
Martinghoul said:
Well, firstly, it's better to look at all these things in trade-weighted terms. For the Yuan, we would observe arnd 9.5% depreciation from the 2015 peak. For the yen, it's more like 23.5% from the 2012 peak. And yes, you could argue that, at some point, the depreciation of the yen could signal something sinister for Japan, so it needs to be observed carefully. On the other hand, you could also argue that the appreciation which occurred between 2008 and 2012 was never warranted by the fundamentals in the first place.
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Even at its highest exchange rate, Japan never had a current account deficit, so, can one argue it was never warranted?
 
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