Updated: Aug 14, 2019
Yesterday, On Seb Gorka's radio show, 'America First' we discussed the Chinese currency devaluation, a devaluation of almost 2.5% that took place over ~36 hours from the time President Trump announced new tariffs. https://youtu.be/x5RUQHY0r-s?t=50
President Trump labeled China a 'currency manipulator', proof of which before the World Trade Organization allows for the US to take action.
China responded that it was 'market forces' that drove the devaluation. It was a curious response for a government that wants to appear in control of ALL situations.
We suspected that the devaluation was initially a Chinese response to the tariffs, but that it possibly had created a series of events where capital leaving China had actually been 'additive' to the planned and gradual devaluation, and might overrun the Bank of China's immediate capability to stop it.
This morning the Wall Street Journal headline announced: "China Keeps Official Yuan Rate Just Stronger Than 7 Per Dollar"
Central bank avoids moving official rate beyond symbolic level
Nope...as one can see in the chart below, the CNY (Chinese Yuan Renminbi) is trading at 7.06, that is almost 1% below the 'Symbolic 7 level'.
It is also a sign of capital flight from China. That is more than a 3% drop in CNY in the last week, negating much of the new tariffs for US Consumers, but definitely cutting into Chinese corporate profitability.
Hong Kong should be worried...how long will it be before China decides to show everyone who is in charge there? It's one thing to stage a bit of an uprising when times are good, but when China might need a symbolic head to crack, cracking down on Hong Kong could kill 2 birds with one stomp.