RMB Surges, USD Dips; US Unyielding, Tricks Abound
The trend of the Chinese yuan has garnered widespread attention, especially its significant appreciation has had a substantial market impact. According to the latest data, the yuan's exchange rate against the US dollar has risen by more than 1000 points within just a few days. However, in the face of the yuan's strong rise, the US dollar, which should have gradually declined, has not "admitted defeat." Instead, the US is attempting to resist this trend and maintain the hegemonic status of the US dollar.
The methods they employ are not normal competition but rather various underhanded tactics to suppress the appreciation of the yuan and even the Chinese economy. What exactly are these underhanded tactics that the US has adopted? Do they really work? Fei Zhu (a metaphorical reference) just wants to remind everyone not to fall at the dawn's eve.
It is well-known that the US dollar is currently the world's largest reserve currency, with a powerful hegemonic status. To prevent challenges to its position, those who hold the US dollar have always used various means, including interest rate hikes and balance sheet reduction, hoping to gain more benefits from these measures.
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In recent years, to raise domestic interest rates and combat inflation, the US has begun to frequently increase the benchmark interest rate. Of course, during this process, the US dollar has appreciated slowly. After hitting the interest rate hike bottleneck, the US stopped raising interest rates.
The reason for stopping interest rate hikes, according to the Federal Reserve, is that inflation within the United States has been controlled. However, in reality, it is because the US's mechanism for harvesting profits has failed, and continuing to raise interest rates would only harm the US.
According to the latest data from the Federal Reserve, the benchmark interest rate will remain unchanged at 5.25%-5.50%. However, the stance of Federal Reserve officials has generally shifted towards easing, and the next step will likely be a reduction in interest rates.
Under normal circumstances, if the US dollar stops raising interest rates or even enters a rate-cutting cycle, the value of the dollar would be the opposite of the interest rate hike cycle. If it appreciates during the rate hike cycle, then it is only logical to expect depreciation after stopping interest rate hikes.
However, the Federal Reserve does not want to accept the reality of the US dollar's depreciation and instead uses various underhanded tactics to suppress the yuan. But the decline of the US dollar's hegemonic status has already begun, and this is an undeniable fact.
As the US dollar's hegemony gradually fades, more and more countries are joining the行列 to de-dollarize.According to statistics, the proportion of the US dollar in global reserve funds has been declining year by year. At the same time, traditional foreign exchange reserve countries such as Russia and China have also begun to increase their holdings of non-dollar assets.
This phenomenon further compresses the US dollar's share in global reserves, and currencies of other emerging markets such as the renminbi have come into people's view and gained broader recognition.
In such an environment, the rise of the renminbi will undoubtedly have a profound impact on the world economy.
Firstly, the internationalization process of the renminbi will be accelerated. The renminbi can not only provide foreign trade financing support for domestic entities, but also facilitate enterprises to expand overseas markets through export-oriented businesses, thereby promoting the development of China's overall economy.
Secondly, the rise of the renminbi will be conducive to improving China's position in global trade and further driving China's economic growth momentum. In addition, as the recognition of the renminbi by countries around the world continues to increase, its position in the international monetary system will also be further consolidated.
However, the United States seems unwilling to accept its own decline and reality, maintaining the strength of the US dollar in the interest rate reduction cycle through various means of shorting China, which is of course unrealistic.
Because since the United States can no longer harvest China, it proves that our resilience is strong, and it is impossible to achieve by shorting and suppressing.
For example, some international assessment agencies have downgraded China's sovereign rating outlook, and some foreign institutions predict that China's economic growth situation next year may not be satisfactory.
Firstly, China is a country with a long history and strong economic strength, and its political stability and social and economic development have been widely recognized, so downgrading China's rating outlook does not conform to the actual situation.
If such a large economy as China, with a growth of 3%, is considered negative, then the United States' rating should be downgraded before China in logic.Because the GDP growth in the United States is essentially nominal GDP growth, which includes inflation data, this is the biggest negative factor.
Secondly, international rating agencies typically consider multiple factors when assessing the sovereign ratings of countries, including stability, economic strength, and fiscal health.
China's stability and economic strength are continuously increasing, so its rating outlook should not be downgraded. The major rating agencies in the United States selectively downgrading China's rating reveals their malicious intentions.
An interest rate hike cycle implies that the United States is conducting a harvest that has been planned for decades, while a rate cut means the harvest is over. However, this time the United States has failed in its harvest, and from a cyclical perspective, China's economy should be on the rise during the U.S. dollar's rate cut cycle, which the United States naturally does not want to see, hence the intentional bearish sentiment.
Lastly, downgrading China's rating outlook is also not conducive to promoting global economic stability and development. The Chinese economy's impact on the global economy is becoming increasingly important. If international rating agencies downgrade China's sovereign rating outlook, it will affect global investors' confidence in the Chinese market, thereby having a negative impact on the global economy.
This point is also easy to understand. Over the past 20 years, China's economy has been the engine of global economic growth, with the global industrial chain revolving around the two countries of China and the United States. Now, maliciously bearish sentiment towards China is also harmful to the United States.
The United States' thinking is simple: if I'm not doing well, I want to drag you down too, but this is probably just wishful thinking on the part of the United States.
Nevertheless, I want to say that these voices are not enough to pose a significant threat to China's economic strength and financial stability.
Essentially, China is at a critical period of leapfrog development, and the advantages of the renminbi are gradually emerging.
With the steady development of China's economy and the robust appreciation of the renminbi, it will undoubtedly add a valuable source of vitality to the world.This is also why I believe that no matter how the internal and external environments change, the financial market will maintain stable operation.
From last year to now, the global financial market has shown complex dynamics, bringing investors an unpredictable future outlook.
For investors, it is even more important to maintain rational judgment and make decisions cautiously at this moment.
At the same time, we should also be highly vigilant against malicious manipulation in the market to avoid being taken advantage of by speculators.
In addition, we can consider America's bearish stance from another perspective, that is, bearishness is to obtain cheaper assets, which is America's consistent style.
Whether it was the South American crisis or the Asian financial crisis, in the latter half of the dollar's interest rate hike cycle, all kinds of Wall Street capital began to cooperate with the U.S. authorities to bearish the already weak regional economies, in order to confuse people.
Let all kinds of non-American capital holding bottom assets fall into anxiety, so as to achieve better bottom fishing.
So the current node is very critical, as individuals, we must not give up the cheap assets we hold to international capital.
As one of the most investment-worthy economies in the world, investing in China naturally means investing in the future. We must not be deceived and must hold on to the bottom chips. If the dollar wants to come, let it come; if it doesn't come, it's just a matter of carrying the sedan chair.Regardless of the circumstances, we are filled with confidence in anticipating that the Renminbi will seize this historic opportunity, grasp the pulse of the times, ride the winds and waves, and create new glories.
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