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Friday, 8 July 2016

Chinese RMB (Chinese Yuan) Depreciation: Why the 100% guaranteed win is getting realized now


USDCNH (US Dollar - Chinese Yuan Exchange Rate):
Up-move in chart means US Dollar up and Chinese Yuan down.

For the past 2 years, I had warned that China's Renminbi (Chinese Yuan) will be forced to devalue persistently and that the Chinese Central Bank has to keep flooding the Chinese economy with Renminbi. This is because:
1. Banks in China have a lot of hidden bad debts, and PBOC has to pump in liquidity relentlessly.
2. China's weak export market needs protection
3. China is still in transition to diversify its economy, particularly to consumption based, so it needs to carry on protecting its manufacturing sector and its export-reliant sectors
4. The labour market needs protection (a need to protect manufacturing industries by making exports cheap)
5. Using of monetary policy is the fastest approach to resuscitate itself
6. China has to suppress interest rate to stimulate the fragile economy, this has a selling pressure on Chinese Yuan

Lastly, point number 7:
7. China likes to use old tricks to stimulate its own stock market: liquidity flood. So, in order to have a sure win in shorting Renminbi or the Chinese Yuan, hedge funds worldwide just need to crash, dump, pound, hammer, sell sell and nothing but sell down the Chinese stock market with immense non-naked and naked shorts. Relentless naked shorts alone creates the churning that is enough to trigger margin calls among the large number of Chinese retailers and cause fear among Chinese investors. That will force the Chinese government to press the "old-tricks" button and the Chinese equities market will be rescued. With that, the RMB is automatically and substantially devalued. Even if Chinese government does not press the "save-market" button, fear drives RMB down just as well and the psychology factor (confidence) plays an important part in financial markets.

 Remember a few months ago, I had mentioned that China's Renminbi (RMB) will carry on to devalue and depreciate again despite China government reiterating, and pounding their chest so confidently, they will keep the currency strong? I also said that George Soros may not really be shorting Chinese stock market (just short term or naked shorts only), but his real focus is actually shorting the Chinese currency. Well, here you are..

<< Today's Latest News  on Chinese Yuan Devaluation >>:
http://www.telegraph.co.uk/business/2016/07/07/world-faces-deflation-shock-as-china-devalues-at-accelerating-pa/

Congrats to RMB shortists who are assured of a sure-win home run, something that I had reiterated countless times that financial markets can be a 100% sure win if one plays his cards correctly.

If the RMB continues this wave of devaluation completing the rounding bottom of USD-CNH (meaning CNHUSD topping out), it means the RMB may bring about a wave of bullish moves in Chinese stocks and stimulate stock markets in Asia-Pacific (Asia, Australia, New Zealand).


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