The sharks are circling, Chinese Yuan devaluation is becoming a self-fulfilling prophecy...
"Société Générale, using the International Monetary Fund’s rule of thumb on reserve adequacy, estimates that China’s foreign-currency reserves are at 118% of the recommended level...China’s reserves totaled $3.33 trillion in December... Edwards estimated that China’s foreign-exchange reserves fell by about $120 billion in January...When foreign exchange reserves reach $2.8 trillion—which should only take a few more months at this rate—foreign exchange reserves will fall below the IMF’s recommended lower bound,”
“China’s reserves have already fallen by $663 billion from mid-2014, and a further decline of this scale would start to severely impair the Chinese authorities’ ability to control the currency and mitigate future balance of payments...Against this backdrop, Société Générale is projecting the yuan USDCNY, +0.0594% to sink to 7.5 against the U.S. dollar this year"
"What is particularly noteworthy about Edwards’ scenario on China is its similarity to how Korea’s currency crisis unfolded in 1997."
"Barclays, meanwhile, projected China’s reserves to have dropped by as much as $140 billion last month to $3.19 trillion"
This is what a drop to 7.5 CNY/USD would look like (i.e. the inverse):
"Sumamabitch!!!"
