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Enter the Yen: Yuan start depreciating on higher volume of trade and noose tightens | Insight China

English: Japanese Yen and Chinese Yuan signs

English: Japanese Yen and Chinese Yuan signs (Photo credit: Wikipedia)

Deflationary fears are currently at their peak in the USA while the Yen is trying hard to stay competitive and keep growth fuel running positive miles but the Yuan tired of appreciating faster thru 2011 is likely to even depreciate despite the new 1% trading band against the dollar as the Yen direct trading results in a depreciation against the Yen from 12.5 Yen to 12.25 Yen on the introduction of Direct trading. Buying interest in the new Direct currency is of course more likely to be the reason for the first pickings as the banks supported the Yuan in pushing it gently into the new Asian trade that could also become Japan’s safety valve later as trade prospects with China take awy the pressure on the currency from incessant domestic JGB buying

The currency moved don more than 2% in 4 days including the first day of trading in Yen. Meanwhile DB has a DimSum index in Japan for trading in the Yuan and HSBC has just received poicy permission from China to trade in Yuan in London. Ofcourse what has received Press to play soundbytes in this game is that China’s been cutting on its Dollar invetment in the Treasury and Dollar dependence globally but many of the local currency swaps may not imply a

BEIJING, CHINA - MAY 30:  A Yuan Dynasty bronz...

BEIJING, CHINA - MAY 30: A Yuan Dynasty bronze mirror is displayed during in the 2012 Poly Spring Auction Exhibition at the National Agriculture Exhibition Centre on May 30, 2012 in Beijing, China. Beijing Poly International Auction made 12.1 billion RMB (about US$ 2 billion) in 2011. (Image credit: Getty Images via @daylife)

natural ubstitution of the Yuan as the Reerve currency but jut more local curremcies in the baket , bnetter equipped to withstand a new liquidity shock ( QE# is coming!) from the US

The latest picking on the US Markets however indicate an eerie similarity between 2010 and 2011 and thi years rise in equities for 3 months followed by the pulling of interest from equities thru the end of Q2 which would take the Dow below 12000 and S&P below1200 as Asian currencies get out of the Euro shock this month and get back to work as the only engine of global growth if the Dollar can start working for them

Yen Yuan volume are currently $300 mln or 1% of the turnover of the Tokyo stock exchange

 

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This entry was posted on June 2, 2012 by in Amitonomics, Banking, China, Global, US and tagged , , , , , , , , , , , .

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