201804.19
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Very Interesting, These ‘Its’

Today for the first time in over a week, HKD moved. That’s not unsurprising, as we should expect that nothing goes in a straight line – even devaluation of this kind. The issue is more about why it might have moved, or what it cost to move it. The Hong Kong Monetary Authority (HKMA) had…

201804.16 11

Some First Principles Of A ‘Dollar Short’

On Friday I wrote: Again, the size of your reserves reflects, and is proportional to, your potential need for funding. You can’t accumulate that many unless you have a similarly arrayed “dollar short.” The bigger the stockpile the more potential for it to get out of hand if things go the wrong way (usually on…

201705.16
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The Noose Only Tightens

Earlier this month, China’s State Administration of Foreign Exchange (SAFE) reported a large increase in official reserve holdings. The biggest “inflows” in several years has, as you would expect, led to much optimistic commentary suggesting if not outright stating that the currency problems are no more. It is not the first time such claims have…

201704.24
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Big Difference Mechanical Tightening

The mainstream narrative as it relates to Chinese money is “tightening.” Having survived the economic downturn last year, we are to believe that the PBOC is once again on bubble duty. They raised their reverse repo rates, considered to be their policy benchmarks, three times up to mid-March. The central bank also increased the rate…

201703.02
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That Escalated Quickly (In Rumors)

I honestly don’t know how much clearer it could possibly get. The mainstream continues to struggle to identify the causes of the “rising dollar” when in all cases it is decidedly simple. The more the dollar goes up, the more whatever counterparty country is paying for those dollars. The entire world is in a synthetic…

201702.23
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Time To Add Mexico?

Is Mexico about to go down the same road as China, Brazil, and so many others have the past few years? The more interesting question may be what took so long, if they are. Mexico’s central bank has been forced into action again, after interjecting itself last month supplying dollars directly to Mexican banks, as…

201702.07
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Raising The Stakes, But Not The Level of Understanding

China’s Foreign Exchange Agency reported a $12 billion drawdown in that country’s foreign “reserves” holdings during January 2017. That was considerably less than the past three months, where all three saw more than $40 billion pulled out, nearly $70 billion in just November. These results are not in any way surprising, and are actually quite…

201604.08
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I Repeat China Repeats

China’s official reported reserves rose in March for the first time in five months. Though reserves had fallen to barely $3.2 trillion in February, that was down just $28.6 billion from January, being already hailed as a success and a step in the right direction since that was less than a third of the shocking…

201603.22
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The IMF Discovers The Ticking Clock

By April last year, it had become clear that conditions in China were heading into dangerous territory. Even though most mainstream attention was fixed on the then-still growing stock bubble, there was so much that was wrong almost everywhere else. The economy would not stop slowing, and indeed still has not. The financial system was…

201603.16
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The Remarkable Inferences About the PBOC’s Unremarkable February Balance Sheet

The PBOC’s balance sheet was relatively quiet in February, with no large moves on either side of its ledger. In fact, these minor shifts appeared to be more so adjustments than the more extreme efforts the central bank had become used to undertaking. The heavy lifting was accomplished in January at least as far was…