China tells state banks to prepare for a massive dollar dump

[Sithara007]

Measures such as this one won't achieve anything. Capital controls are a thing of the past. Chinese Yuan is already one of the most manipulated currencies in the world. And they can't boost up the exchange rates with these half hearted measures. This is similar to what the authorities did in Russia. In order to prop up the Ruble, they asked the businesses to convert 75% of their foreign revenues to local currency. It had a short term impact, but in the long term it achieves nothing. If the national currency need to be strengthened, there are other ways to do it. But the governments don't want to spend their funds on doing it.

[Wind_FURY]

~
I misunderstood China's intentions, but stompix posted a very good point on why China is preparing for a "massive U.S. Dollar dump". It's just to prop up it's own currency, the Yuan.

Perhaps the Fed's tightening to stop, and reverse inflation in the country is having a negative effect from China's point of view. Because through a strong Dollar, and from China's point of view, it might be that inflation is also being exported to them. Haha.

The exchange rate charts don't show any major change though.

Because Forex is a more sophisticated animal, and to attack it is to use a different strategy. It isn't like cryptocurrencies that plebs and whales click the maximum amount, then click the market-buy button. Hahaha.

Like QT, QE, and BRRR-Money prints it takes time to see the effects.

In any case, if you look at the act alone this conclusion (strengthen their currency) makes sense and it may very well be one of the motivations; but I believe there is a bigger picture here. China is not doing ONLY that, there is a lot of other steps they are taking. Like the ones I listed, and I clearly see a trend.

From the point of view of the United States, China needs to export more products to them to get the U.S. Dollars to replace that that they have dumped. No country can continue to play the macro-economics game without U.S. Dollars.

[posi]

Although, isn't China still one of the largest HODLers of United State debt, and U.S. Dollars? Why would they start dumping an asset that they are largely exposed to, and crash the price of that asset? Do they truly want to crash the currency of U.S. economy, the largest importer of their exports?

If rather it's not China trying to dump the dollar they're trying to find a way to save their yuan, avoid letting it drop too deeply, seriously affecting the national economy. Japan and other countries are also planning to find solutions to prevent the devaluation of their national currencies to avoid creating a serious economic crisis in their countries.

The dollar is at a 20-year high and this is good for the US but for the countries that are borrowing money from the US, which depend on the US, they are having a hard time repaying the US government and do business with America.

[el kaka22]

I believe that they are going to be forced to sell dollars eventually, what are you going to do with trillions of dollars that you can't use, and still have a financial break in your nation? We have seen the huge real estate bubble bursting in China just a year ago, and that means they need to get some more yuan, and value their own money a bit more in order to protect its citizens.

USA should start to move their manufacturing to other places gradually as a response to make sure that nobody has a lot of dollar to devalue it whenever they want to. If you are dependent on just one nation to build everything for you, then you are going to eventually lose its value.

[DrBeer]

I believe that they are going to be forced to sell dollars eventually, what are you going to do with trillions of dollars that you can't use, and still have a financial break in your nation? We have seen the huge real estate bubble bursting in China just a year ago, and that means they need to get some more yuan, and value their own money a bit more in order to protect its citizens.

USA should start to move their manufacturing to other places gradually as a response to make sure that nobody has a lot of dollar to devalue it whenever they want to. If you are dependent on just one nation to build everything for you, then you are going to eventually lose its value.

Absolutely right !
China's export-oriented economy cannot live without the Euro and the Dollar. The euro is not in the best position right now. So it is replaced by the dollar, where the euro has become uncompetitive. This means that the status of the dollar is getting higher .. Which, in general, perfectly shows the current cross-rate of the dollar / euro.
Regarding the transfer of production - 2 months ago, the United States banned American companies for the next 10 years from placing new high-tech production in China.
Moreover, a significant part of high-tech industries is beginning to migrate back to the United States.
We will see the results of this very soon ... And this is clearly not to the benefit of China, which will soon burst the bubble of its artificially inflated economy ...
PS. The state ban on the transfer of large amounts of money from China is already working. Many understand what this means ....

[Wind_FURY]

Although, isn't China still one of the largest HODLers of United State debt, and U.S. Dollars? Why would they start dumping an asset that they are largely exposed to, and crash the price of that asset? Do they truly want to crash the currency of U.S. economy, the largest importer of their exports?

If rather it's not China trying to dump the dollar they're trying to find a way to save their yuan, avoid letting it drop too deeply, seriously affecting the national economy. Japan and other countries are also planning to find solutions to prevent the devaluation of their national currencies to avoid creating a serious economic crisis in their countries.

The dollar is at a 20-year high and this is good for the US but for the countries that are borrowing money from the US, which depend on the US, they are having a hard time repaying the US government and do business with America.

The situation in Japan is their central bank's fault, the Bank of Japan. They planned, and purposefully printed trillions, and more TRILLIONS of Yen to buy shares of private companies to save them from failure. The effect which we're seeing is a weaker currency. Because of the Fed's strenghtening of the U.S. Dollar, I believe it will give them some capacity to do the same when the recession has done its worst. The Fed will be "investing", and will be buying shares of failing American companies/banks. The U.S. government will literally OWN a large slice of the U.S. economy.

[goldkingcoiner]

In the long run, this is a good thing. Especially for Bitcoin. China becomes less reliant on the US, the US becomes less reliant on China. We all stop trying to politically control each other and China can keep on quietly torturing, enslaving, killing and organ-harvesting the "unwanted" peoples of their population.

What a fun time to be alive. Russia is probably going to never touch the dollar again and Bitcoin will finally show itself for what it is.

Namely a third option. One which remains stable as the one global money.

[pooya87]

Those who claim China is trying to save its own economy are ignoring one simple question: where do all those dollars go?

They won't just vanish into thin air, they go back to United States. Now the increased "supply" means only one thing, more inflation as dollar loses its value.
In other words China dumped an "asset" at its ATH thanks to FED increasing the interest rate and consequently increasing the exchange rate of dollar.

This is as I said another step in the ongoing global economic war.

P.S. Something interesting to point out is that China is filling that small gap left in its economy by abusing the failing EU economy and attracting the investors, companies, factories, etc. US is doing the same but the difference is that China still has access to cheap energy while US is not and US is also hit with inflation and recession.
In any case in this war EU is screwed! It doesn't have that energy, the inflation is high, production cost is extremely high and investors are fleeing. High unemployment rates in near future in EU is very likely too.

[blue_hurricanger]

In the long run, this is a good thing. Especially for Bitcoin. China becomes less reliant on the US, the US becomes less reliant on China. We all stop trying to politically control each other and China can keep on quietly torturing, enslaving, killing and organ-harvesting the "unwanted" peoples of their population.

Nope, not good for the long run. If superpowers like China and US were less reliant on each other, the whole world become more fragile. Think about if both have less stake in each other, would they really care if the other goes on full rampant or war with their neighbor? No, right? The thing about it is if countries start to become more isolated, more shit will happen without anyone batting an eye. I'm not a globalist, but I do see the benefit from it to keeping countries in check, from going to the rampant mode.
US and China are reliant on each other and will keep each other in check, that is my point. The same as nukes in the cold war when superpowers like the US and Soviet only dared to pull proxy war at each other sphere of influence.

[DrBeer]

Not subsiding, while artificially hidden crisis reminds itself of Yuan/Dollar quotes. In this situation, "throwing away the dollar" is a really good solution? Well, the Russian Federation transferred a significant part of its gold reserves to the Yuan, so what? Net LOSS - billions of dollars. China will "merge" its dollars, print a lot of Yuan and ... WHAT?
Let's look at the chart:

[kryptqnick]

I think that China's move makes sense because they want to strengthen their fiat. Just half a year ago, Russia did something similar by forcing banks and, I think, corporations, to sell 80% of their foreign reserves for local fiat to make it stronger. That, with some other actions, did manage to stabilize ruble. So the idea of selling USD to make yuan stronger makes sense, and if someone wants to support China, I guess they can do the same. But let's not forget that the USD is devaluating as well, and so are other major fiat currencies. So IMO if one wants to avoid devaluation and is willing to take a risk and do long-term hodling, now is the time for Bitcoin.

[Wakate]

I think China is really experiencing a difficult time now that time look very tough and the country economy seems to be falling. China taking a bold step to sell part of there dollars reserve could be an alternative to boost there economy and make it stronger. I hope this will have a significant effect on there prospect for long since they want people to keep buying yaun to make it stronger to be able to withstand the difficult time that the county is facing. China is trying to use this strategy to bring back the economy to recovery position.

[xiao20002]

I think China is really experiencing a difficult time now that time look very tough and the country economy seems to be falling.
...

Aren´t their economic difficulties self-inflicted at least to some degree?

I imagine that their very restrictive corona measures (e.g. locking down entire cities
like Shanghai for weeks) have harmed the local economy.