China Loses $195 Billion (about $30 Trillion) by Intervening to Sell Dollars to Defend Its Currency

“Emerging Market Foreign Currency Reserves Decline More Rapidly than in Past Phases of Currency Weaknesses in Currency Defense.
This year, emerging markets have seen a more rapid decline in foreign currency reserves than in past phases of their currencies’ depreciation. This is because central banks are selling dollars to protect their currencies from dollar appreciation.
According to statistics from the People’s Bank of China (central bank), China, the world’s largest holder of foreign exchange reserves at over $3 trillion, saw its reserves decline by $195 billion from January to August. The bank’s reserves fell by $19.5 billion in January-August.

For more information, see source 2022/10/20/20

“As for the Kishida administration’s price measures in Japan, 11% of respondents “approve” of them, while 75% “do not approve” of them, far more than in the previous survey. Cabinet support stood at 27%, down 2 points from the previous September survey.
When asked, “What do you think about the Bank of Japan’s monetary easing policy?” 55% said it should be reviewed, 22% said it should continue, and 22% were unsure.”

The dollar is probably too strong, how did that happen?

“Well, they’re raising interest rates at an incredible rate.
Japan has negative interest rates, not zero interest rates.”

“Well, China has a lot of dollars, so they should be fine.
I don’t know about Korea.”

I thought the Chinese yuan was linked to the dollar.

“By its very nature, it’s pegged to the dollar, and it’s a floating exchange rate with limited volatility.
China can’t match the U.S. interest rate, so they have to intervene.

In effect, it’s a controlled exchange rate. That’s because it’s communist.

“China, like Japan, has controlled inflation and low interest rates, so it’s no surprise.
But the yen is weakening against the Chinese yuan as well, so Japan is dead in the water.”

The dollar is about to go down.

Sell, sell, sell the dollar.

“The yen is becoming a trash currency than its yuan. ....
The world is truly losing out .....”

Well, it’s a good time for the BOJ to get rid of their dollar hoard.

Better than Japland, which lost 55 trillion yen.

“How can we lose 55 trillion yen when the special account for foreign exchange is about 30 trillion yen?
How can they lose 55 trillion yen?”

Japan is also losing over 10 trillion yen.

For the first time, our interests are aligned with China’s.

The US is always intervening to protect its currency.

It’s not that the Yen is too weak, it’s that the dollar is too strong.

If only we could sell our US debt, which we’d have to borrow forever.

Why don’t we all just sell US Treasuries?

“If the dollar is selling, it means the dollar is losing value.
I think the U.S. economy is in trouble.”

“He’s been complaining about the Japanese dollar at 160 yen.
He’s been sticking it to the government since the 140-yen level.”

“They’re also shutting down supercomputers because of the trade deficit due to high resource prices.
Utility bills are still going up before winter.”

So far, the government and the BOJ have managed to minimize the impact of inflation on the lives of the common man.

Can Japan sell US Treasuries?

“They are usually sold.
The source of this intervention is US Treasuries.”

“Yes, we can sell them.
The government doesn’t hold all of them, so the banks and life insurers that held them for a short period of time as a hedge against currency risk have sold about $20 billion this year, haven’t they?
I think the government and the BOJ are still taking it out of their dollar deposits.”

I don’t understand how China, which has the right to issue currency, can lose or lose.

“Japan is in too much trouble too.
The yen is so worthless that businesses are dying and foreign workers are not coming.”

You’re not losing anything, you’re buying dollars when they’re cheap and selling them when they get expensive, so that’s a big win. In fact, if you denominated it in yuan, you would have made about $50 billion in interest.

“Japan doesn’t have any resources, so 90% of the materials come from overseas.
So the rush to raise prices will go on forever.
If it’s not good, the price will double or triple.”

“Foreign investors are starting to think that if Japan starts selling its large holdings of U.S. Treasuries, the dollar will be in trouble.
Until now, no one thought Japan would ever sell U.S. Treasuries, but now that they’re selling them or using them as collateral to fund their yen-buying intervention, confidence in the dollar is shaken.
Normally, interest rate differentials would weaken the yen and strengthen the dollar, but when the credibility of a currency is in doubt, like the Turkish lira, the currency weakens even with high interest rates.
The solution, they say, is not to let the yen weaken any further.”

“When the reserve currency has a high interest rate, it naturally becomes the sole reserve currency, but it is also the fault of the reserve currency’s low interest rate that all the countries have had low interest rate policies.
But the worst thing is that the pace of interest rate hikes in the U.S. has been out of the ordinary.

“Japan has indefinite and unlimited currency swap agreements with the U.S., Europe, the U.K. and Canada.
You don’t know that Japan has indefinite and unlimited currency swap agreements with the US, Europe, UK, and Canada, do you?
China has no Western support at all.

“A swap is a currency borrowed from another country and returned with interest.
There’s no way the U.S. would lend it to them with no risk.
The US-Japan swap is an indefinite, unlimited loan, but it doesn’t say no return, no interest, does it?”

The BOJ is also selling the dollars it bought when the yen was super strong now, which means it made about 3 trillion yen in yen.

“30 trillion yen is 200 billion dollars?
That’s quite a loss of foreign reserves.”

“You didn’t lose anything.
You didn’t lose anything, you just converted dollars to yuan at a higher rate.
Japan is doing the same thing.”

“China has a trade surplus, but it’s just foreign capital making money, so it’s just a drain on foreign currency. It’s also eating up Hong Kong’s foreign currency.
Unlike Japan, they maintain unequal trade with dollar beck.
That kind of trade is over.”

“I think it’s great that China is not at the mercy of the US.
The world should sell more US dollars.”

“China is by far the largest holder of foreign exchange reserves.
And it’s only going to increase in the future, so they need an opportunity like this to get rid of it.”

“Maybe the plan is to sell U.S. Treasuries to tighten the U.S. fiscal belt.
Japan seems to be selling a lot too.
I think they’ve decided that this is a good time to sell.”

“You can’t sell U.S. Treasuries.
Long time ago, when Prime Minister Ryutaro Hashimoto hinted at selling U.S. Treasuries.
Hashimoto hinted at selling US Treasuries, which infuriated the US
He lost his post.”

“It depends on the time.
We sold them last month.
But if he sells now, interest rates will be in trouble, so he won’t sell hard.
Japan still has an inordinate amount of money to intervene in the currency market.”

A strong dollar doesn’t do Japan any favors right now, does it?

In the past, Japan made a lot of money even when the dollar was high, so Japan had purchasing power for imported materials, etc.
Now it’s just a cost push, which is not a good thing.”

“China has a trade surplus with the U.S., and they’ve accumulated a lot of U.S. Treasuries and dollars that they can’t spend.
They’re happy to sell.
It’s a different situation from Japan’s.”

“Selling dollars.
I’d like to see an article about what they bought.
I’d like to see an article about what they bought.
If you really bought yuan.
I’d like to see it go up a little more.

I’m just saying, you know, we’re talking about a profitable business.

“The dollar’s still going up.
Why’d you give it away?”

“The whole world’s in trouble. Is the U.S. winning by itself?

“China sold US Treasuries for a huge profit & currency protection!
U.S. Treasuries plunge, yields soar, stock prices plunge.
It’s not a solo victory at all!
Currently, the U.S. hates it the most when U.S. Treasuries are sold.
Japan would sell US Treasuries if it could, but it can’t because the US would be furious.”

“The U.S. is just trying to keep its own inflation under control, which is its top priority.
The other countries can’t keep up with it, and that’s what happened in Ukraine.”

By vadesu

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