Cleitus: Frank, if the sharks and whales are waiting for the 1:1 to begin buying into the dinar then who is/are buying it up now at the lesser rate?
Frank26: This is a superior question.
THE BANKS AROUND THE WORLD.
They are NOW being seeded with the IQD because the next phase is ………..
Too Cool !!! KTFA Frank…… Ok …. Ok ……. IMO ……LOL !!!
Purifiers: China just dropped a hint about the next massive change for its currency
Fr., 11. Dez 2015 17:38
China’s Central Bank suggested in an editorial on Friday that it may be time to de-peg the yuan from the dollar, and instead peg it to a basket of currencies, The Wall Street Journal reports.
The posting, published in Chinese state media outlet The People’s Daily, gave no details on what that basket would include, or when these moves could be made.
However, Chinese officials are about to attend their annual Central Economic Work Conference, so you can imagine they’ll be talking about it there.
Now is definitely the time to talk yuan. This week it fell to its lowest level against the dollar in four years.
Consider this de-pegging announcement a way for the Chinese government to manage two conflicting goals for its currency — its desire that the yuan be set by market forces and that it also be stable.
Those are two conditions that the yuan had to meet when it was accepted into an elite club of currencies designated as global reserve currencies by the World Bank at the end of last month. To make the cut a currency has to be widely used and fairly stable.
China doesn’t want to cause instability by devaluing the yuan, so it has to figure out how to help the market gently guide the yuan down to its true value. Of course, the market isn’t known for being gentle.
The real drama with the yuan started in August when the government announced that China’s July exports fell 9%. At the same time, economists noticed that the ratio of job offers to job seekers was starting to decline. A few days later, the government devalued the yuan by 2% in an effort to stimulate the economy, which has slowed down dramatically over the last year.
Remember, though, that at the same time China was also still trying to get into to this elite club — the Special Drawing Rights (SDR) basket of currencies. To get in, it had to keep the yuan stable. So the government started to spend billions in reserves to do just that — to keep the yuan from depreciating further.
For a few months that seemed to be working. Analysts voiced concerns that China may spend too much of its cash trying to prop up the yuan, but a lot of those fears were assuaged in October, when currency reserves rose by $11 billion.
On Monday however China revealed that its reserves declined by $87 billion in the month of November. After October’s print that came as a shock to some, and over the week the market sent the yuan to its lowest level in four years.
Part of the reason for that, The Wall Street Journal pointed out, is that China reduced some of its currency controls in order to get into the SDR club. That made it easier for Chinese people, especially the super rich sitting on a lot of cash, to change their yuan to dollars.
China can’t prop up the yuan forever. It has an economy to fix, and a weaker currency may help a bit with that by spurring exports.
If it de-pegs the yuan from the dollar it could potentially weaken the yuan without causing a huge disturbance in the market.
Emphasis on “could.”
Mountainman: Yes,Yes,Oh Yes……………WHY the depeg from the Dollar???…….
Well as my memory serves me correctly US Banks were REQUIRED to be BASEL 3 compliant by January 2015….that also carries the Weight for GLOBAL Countries as well=WHY China and others are also REQUIRED to have their TRUE Value of their Currency Reflecting their Resources, Assets, and the Production of It’s resources…..NOT being manipulated=ANYMORE……
Sooo IMO We will ALL See that BASKET reflect the BASEL 3 REQUIREMENTS=No More FIAT Only, but ASSETS=ie. Gold, Products, Natural Resources, etc…..And YES USA this Basket of REQUIREMENTS includes You as Well…..
Come January 2016 IMO…..The World will SEE this NEW System FRONT and CENTER……Hello WALL STREET and ALL you other Foreign STOCK MARKETS!!! S
O I See A BASKET OF BASEL COUNTRIES…..READY to ROLL!!!!!!!
Walkingstick: China’s Central Bank Signals Intention to Loosen Yuan’s Peg to Dollar
PBOC says it makes more sense to measure yuan’s exchange rate against basket of currencies
Updated Dec. 11, 2015 12:53 p.m. ET
BEIJING—China’s central bank signaled its intention to change the way it manages the yuan’s value by potentially easing its loose peg to the U.S. dollar and instead letting it track the currencies of its broader trading partners.
In an editorial posted on its website Friday night, the People’s Bank of China said the yuan’s exchange rate would be better measured against a basket of currencies rather than the dollar alone. The foreign-exchange trading system run by the central bank started calculating a yuan exchange-rate index Friday to provide a regular reference against a basket of currencies, the article said.
It isn’t clear whether or when China would make such a move, which it has discussed in the past. But any shift away from the dollar could have broad repercussions for currency markets—such as reducing China’s demand for dollars—as well as for investors and global trade. It would also demonstrate China’s determination to make the yuan a global currency, with a value determined more in line with other major currencies, and to step out of the dollar’s shadow as the world’s de facto currency.
Referencing the yuan against a basket of currencies now would help keep it “stable at a reasonable equilibrium,” the editorial posted by the central bank said.
The central bank didn’t offer additional details on the makeup of the basket or a timetable for when it actually would change the way it manages the yuan. As far back as 2005 it discussed pegging the yuan to a basket of currencies, and five years ago made similar comments. Still, the yuan continued to closely track the value of the U.S. dollar, even as other emerging-market and Asian currencies endured more volatile swings during events like the global financial crisis.
China has reasons why it would consider changing its currency management this time. The yuan faces growing pressure to depreciate versus the dollar due to potential higher U.S. interest rates and China’s slowing economic growth has encouraged investors to find places other than China to park their money.
On Friday, the yuan recorded its biggest weekly drop against the dollar—about 0.83%—since a surprise devaluation on Aug. 11. A dollar bought 6.4553 yuan based on Friday’s closing price published by the China Foreign Exchange Trade System. In recent days, the dollar has been strengthening against the world’s major currencies as investors expect the Federal Reserve to raise interest rates next week.
Longer-term, a basket could indicate China is sticking with its pledge to make its exchange rate move in accordance to the markets. That would help it increase global use of the yuan, another of its goals. Last month the International Monetary Fund decided to add the yuan to its basket of reserve currencies, which will put more pressure on China’s central bank to bow to market forces.
“Managing the yuan’s value against a basket of currencies rather than just the U.S. dollar is an economically astute move that will facilitate a smoother transition to a flexible, market-determined exchange rate,” said Eswar Prasad, a Cornell University professor and former China head for the IMF.
The move would help Chinese exporters who have seen their goods become less competitive in markets like Europe as the yuan has followed the dollar’s rise against other currencies. It also would make China less sensitive to the decisions of the U.S. Federal Reserve, which can hurt the value of China’s holdings of dollar-denominated assets when it moves to weaken the dollar.
Potential decoupling isn’t without risks to China. Most investors still look at the dollar-yuan exchange rate when making their China-focused investment decisions, said Zhu Chaoping, China economist at UOB Kay Hian, a Singapore-based brokerage. “Loosening the yuan’s peg to the dollar now could add to investors’ worry over the yuan’s stability,” he said. “The timing is not necessarily good.”
For now, China is letting the yuan gradually weaken against the dollar. The PBOC is testing how far it can let the yuan depreciate without setting off a sharp selloff like the one that followed the yuan’s surprise devaluation on Aug. 11, people close to the central bank have said.
Still, the PBOC is fighting a difficult battle. On one hand, China’s slowing economy is pressuring the central bank to weaken the yuan to help revive growth. On the other hand, China’s leadership has repeatedly pledged to keep the currency stable in a bid to enhance the yuan’s global appeal—a stated national goal.
The central bank already had spent hundreds of billions of dollars defending the yuan before the IMF added it to the fund’s reserve-currency basket. It would become increasingly costly for China if it continues to do so, many analysts say.
“Now with the IMF decision behind it, the central bank feels less pressured to continue bolstering the yuan,” a senior executive at one of China’s top four state-owned banks said.
Many investors and analysts now think the yuan is overvalued relative to its purchasing power, forcing Chinese companies to cut prices and lower wages to stay competitive, trends that could cause the economy to slide into deflation.
The Chinese currency remains a relatively strong currency by many measures. Since Aug. 11, when the central bank unexpectedly devalued the yuan by about 2%, the currency has fallen 3% against the dollar but has strengthened against the euro and weakened only slightly against a basket of currencies.
Zhou Hao, a senior economist at Commerzbank AG, said given the yuan’s significant appreciation versus the dollar in the past decade, “China is likely to accept more softness in [the] yuan going forward to gain more export competitiveness.”
wmawhite …the IMF announced 3 weeks ago a new MoU with the CBI and expectation of Iraq re-entering the economy markets prior to the first half of 2016.
Regardless of 90 days or no 90 days…the IMF has already stated what their expectations are…that Iraq is going to do something during the first part of 2016.
Done, done and done. the IMF would never open their mouths…state what they expect Iraq to do unless they have a solid reason to do so.
Of course…if the CBI is in concert with the IMF everything that we are seeing is headed towards those expectations…With all of this said…what is needed by the CBI to “re-enter the economy markets during the first half of 2016?
Answer: a currency that Iraq can conduct international commerce…to do what? Conduct business. And IMO…this is truly where we are today…we have been told what to expect by the IMF.
Ingenious1: Puts Elmer was talking about – Zerohedge article
Is This What Happens On Monday?
Submitted by Tyler Durden on 12/11/2015 23:45 -0500
Four months ago, China decided to devalue the Yuan sending a shudder up and down collateral chains globally and forcing carry trade unwinds and derisking everywhere. Friday August 21st saw notable weakness as that weakness washed ashore in US equities.. and then Black Monday struck. The ensuing debacle stalled The Fed and shocked markets.
The last week, we have seen China devalue the Yuan very significantly, EM capital markets turmoiling, and today, that was ashore in US equities… what happens next?
As a reminder, JPMorgan’s “seer” Marko Kolanovic warned this week that…
“As for near-term risks—we believe the most imminent market catalyst will be the December Fed meeting in which we are likely to see the first rate hike of the cycle.“
But to a market which has traded mostly on technicals and program buying (and selling) in recent months, there is something far more troubling than just what the Fed will announce:
This important event falls at a peculiar time—less than 48 hours before the largest option expiry in many years. There are $1.1 trillion of S&P 500 options expiring on Friday morning. $670Bn of these are puts, of which $215Bn are struck relatively close below the market level, between 1900 and 2050. Clients are net long these puts and will likely hold onto them through the event and until expiry. At the time of the Fed announcement, these put options will essentially look like a massive stop loss order under the market.
What does this mean?
Considering that the bulk of the puts have been layered by the program traders themselves, including CTA trend-followers, and since the vol surface of the market will be well-known to everyone in advance, there is a very high probability the implied “stop loss” level will be triggered, and the market could trade to a level equivalent to the strike price,somewhere in the 1,800 area, or nearly 200 points below current levels.
Which would be a tragedy for the Fed: after all, nothing is more important to Yellen, Draghi et al, than affirmative market signaling – pointing to the (surging) market’s reaction and saying “look, we did the right thing”, just as Draghi did on Friday when he explicitly talked the market higher in the aftermath of the ECB’s disastrous announcement.
The irony will be if, regardless of what the Fed does, the subsequent move is driven not by the market’s read through of monetary policy but by the “pin” in this massive $1.1 trillion option expiry, the biggest in many years, one which if recent market action is an indicator, suggests the stop loss strike level will be taken out in the process setting the “psychological” stage for market participants who will look at the drop in the market, and equate it with a vote of no confidence in what the Fed is doing, potentially forcing the Fed to backtrack in less than 2 days!
Whether this happens remains to be seen, and we are confident the Fed’s “arm’s length” market-moving JV partner, Citadel, is currently scrambling to prevent any imminent selloff. However, considering Kolanovic’ track record of hinting at key risk inflection risk, it is quite likely that whatever the ultimate closing price on December 16 and, more importantly, December 18, volatility may very soon have an “August 24” type event.
TnDr: Good find…yes, this is pretty much what Elmer and Iko were speaking to. The Fed is between a rock and a hard place. When the public who holds stocks feel a no confidence it is disastrous results.
What were we told here by Tony? The Dinar is the lynchpin for the GCR….logic tells us the GCR is going to fix many issues….but, there will be ripples that will probably grow to a tsunami for some for a little while.
This is a defining week. We will soon see if the ones that keep resisting have come up with a plan yet again to delay….keep an eye on Turkey/Iran/Iraq tensions…some are saying that is intentionally in place to cause problems of huge size…hope not, and hope it does not become large enough to stop this again.