RMB Surges 700 Pts, US Debt & Stocks Hit?
It can truly be said that they are brothers on the surface but stab each other in the back. Japan and the United States can be described as having a plastic brotherhood. The United States' attempt to raise interest rates to harvest globally did not go as planned, as the most severely injured was its little brother Japan, who followed closely behind. Japan had hoped that the United States would consider their "brotherly bond," but the reality was unexpected. The United States seemed to care little about Japan and even warned Japan not to resist.
However, Japan is not a country that follows orders blindly. As the saying goes, those who recognize the trend are the true heroes. Seeing the United States trying to push Japan to the brink of death, Japan disregarded any Japan-U.S. friendship and rolled up its sleeves to fight, injecting a large amount of yen into the Japanese market in an attempt to stabilize it and reduce the impact of the U.S. interest rate hike on Japan. This time, the yen and the Chinese yuan both surged in value. Could it be that Japan is "abandoning darkness for light," ready to join forces with China to confront the United States? As the Chinese yuan and the yen appreciate, the crisis for the U.S. dollar, which is in a cycle of interest rate hikes, further escalates. The United States, still immersed in the dream of the dollar tide, may find itself waking up to a pipe dream.
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As the saying goes, being an enemy of the United States is dangerous, but being an ally of the United States is deadly. When they see you as profitable, they use small favors to tie you down; when there is no profit to be made, they discard you without hesitation.
When it comes to Japan and the United States, who doesn't know that the United States is Japan's big brother? In the development of the past decade or so, the relationship between the two countries can be described as "intimate."
However, all good things must come to an end. In order to undermine China, the United States did not hesitate to push its little brother forward. Faced with the ruthless abandonment by its former big brother, Japan seemed to have a sudden realization and injected a large amount of yen into the market to save it. Is this an indication that Japan is ready to join forces with China to confront the United States?
Unlike the continuous interest rate hikes of the U.S. dollar, most countries in the world have lowered interest rates, including China.
Under normal circumstances, with the U.S. raising interest rates and China lowering them, the interest rate gap between China and the United States would widen, causing the Chinese yuan's exchange rate to fall step by step. However, contrary to expectations, the opposite trend has emerged.
According to relevant media reports, on July 25th, the exchange rate of the Chinese yuan to the U.S. dollar reached 7.2036, compared to the previous exchange rate of 7.2973 for the Chinese yuan to the U.S. dollar a few days earlier. In just one day, it astonishingly surged by 700 points, which was quite surprising.It should be noted that in the current overseas market, many people are bearish on the Chinese yuan, believing that with the Federal Reserve's interest rate hikes, the yuan is bound to plummet. There are also quite a few short sellers waiting to short the yuan. Now, reality has slapped them in the face, and they are really crying out for help.
Why does the yuan rise instead of falling when the US dollar raises interest rates?
There are probably three reasons.
The central bank's interest rate cut is mainly to promote the recovery of the domestic economy. In the first quarter of this year, the GDP growth rate was as high as 5.3%, but it fell by 0.6% in the second quarter, indicating that there are still certain hidden dangers in the recovery of the domestic economy.
In order to build confidence in the market, the central bank's interest rate cut just shows China's determination to further promote China's economic development and also points the direction for overseas capital.
In addition to the domestic interest rate cut, externally, it is selling US debt. As the US dollar's interest rate hike cycle continues, the risk of the US dollar blowing up is also increasing. China, in order to avoid being too affected by the US dollar, sells US debt in advance, and a large amount of US debt entering the market has made the yuan appreciate to a certain extent.
And most importantly, the original purpose of the US interest rate hike was to harvest the world, especially China. However, as the US economy becomes worse and worse, the market anticipates that the US dollar interest rate cut is inevitable, leading to the US dollar index falling day by day. As the market becomes more and more bearish on the US dollar, the use of the yuan is increasing, which also leads to the phenomenon of the yuan not falling but rising.
If the yuan's surge is understandable, then the yen's consecutive days of appreciation is even more thought-provoking.
It should be noted that the US dollar's interest rate hike is to harvest the world. As a younger brother of the United States, it has repeatedly invested in the yen to save the market. Isn't this a blatant stab in the back of the United States?
What's even more bizarre is that the timing of the yen's appreciation coincides with the surge of the yuan. Is it that Japan has suddenly realized the crazy behavior of the United States in harvesting the yen and is going to join hands with China to fight against the United States?In fact, the rise of the Japanese yen is mainly due to Japan's massive injection of yen into the market to stabilize it. As for the appreciation of the Chinese yuan, the Chinese government has not intervened. If we talk about collusion, it can only be said that both sides have reached an implicit understanding in selling U.S. debt.
Now, the dominance of the U.S. dollar is fading, and it is no longer possible for the dollar to reap the world. With the appreciation of the yuan and the yen, what is the current situation of the U.S. dollar?
Is the dollar crisis escalating?
It can be said that it is like lifting a rock only to drop it on one's own foot. The failure to reap has ultimately pushed the dollar to a dangerous edge, and the United States now has a hard time expressing its bitterness.
The U.S. dollar has been aggressively raising interest rates, and a large amount of capital has flowed into the United States. To some extent, the purpose of the dollar's interest rate hike has been partially achieved.
However, along with the interest rate hike of the dollar, the U.S. debt is also increasing day by day.
The high interest rates of the dollar have led to a multiple increase in the interest payments of U.S. debt, with an average expenditure of 1 trillion U.S. dollars every 100 days.
However, the domestic economic data in the United States is not optimistic. According to data, the U.S. manufacturing index has been below 50, showing weak economic development. At the same time, the unemployment rate is rising, and domestic consumer prices in the United States are also continuing to decline. All signs indicate that the current situation within the United States is a huge mine that could explode at any time.
Now, China, Japan, and other countries are selling a large amount of U.S. debt. Instead of finding ways to deal with it as soon as possible, the U.S. government is printing a large amount of money, further exacerbating the devaluation of the dollar, which has also led to the further escalation of the dollar crisis.What will the future trend of the US dollar be like? Will the next president abandon the dollar? At present, all are unknown.
For us, only by taking precautions in advance can we minimize losses in this smokeless currency war.
And Japan, as a younger brother of the United States, openly stabbed the United States in the back, which also sounded an alarm to the world. When danger comes, only oneself is the savior.
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