It's the strangest thing. Two weeks ago we posted "Chinese Iron Ore Imports Rise 70% As Steel Production Stagnates" with the introduction:
The last time we saw this sort of stockpiling behavior the yuan was under 7-to-the-dollar and our guess was that the order had gone out to importers to convert currency into storable commodities ahead of a devaluation in the yuan....
At the time one yuan would get you 13.90 American pennies. Today it would only fetch 13.82 pennies. Here's the chart via TradingView for the last month:
Of course the yuan had to, almost immediately, strengthen, if for no other reason than to remind me that I'm doing this stuff out in public, in real time, naked, for all the world to see.
But then, after being reminded it is good to be humble, we see this from Bloomberg, March 21/22:
Yuan Falls to Four-Month Low on Signs China Is Loosening Grip
The yuan weakened past a key level that China had been defending for months, as traders made tentative bets that policymakers are ready to greenlight currency depreciation amid a sluggish economic recovery.
The onshore yuan breached the 7.20 per dollar line it had mostly held since November on Friday. The weakness sent ripple effects across Asian markets, accelerating drops in some regional currencies and weighing on sentiment toward China-linked markets.
The catalyst for the move was People’s Bank of China lowering its daily reference rate for the managed currency by the most since early February. State banks also refrained from selling the dollar in large amounts at the open, according to traders.
“It seems like this move higher is triggered by the weaker fix,” said Fiona Lim, senior FX strategist at Maybank in Singapore. That sends a sign that the “PBOC is willing to allow some weakness in the yuan as the dollar gains a bit of bullish bias recently.”....
....MUCH MORE
