China’s yuan has suffered its biggest one-week fall in 20 years, nearing key trigger levels that threaten a wave of forced selling and mounting stress for those with dollar debts. The jitters come amid reports of fire-sales of Hong Kong property by Chinese investors desperate to raise cash, some slashing their prices by 20pc for a quick sale. A liquidity squeeze in mainland China has already led to the collapse of Zhejiang Xingrun real estate this week with $570m of debts, the biggest property failure so far.
The yuan weakened sharply on Thursday to 6.23 against the dollar and has now lost 3pc since January, a clear break with China’s long-standing policy of slow appreciation. Geoffrey Kendrick, from Morgan Stanley, said the currency has broken through the 6.20 level where a cluster of structured products are triggered. These are known as losses on target redemption funds. The losses have already hit $3.5bn.
The latest move creates a potential “non-linear movement” that could push the yuan rapidly to the next level at 6.38, where estimated losses would reach $7.5bn, and from there jump to 6.50.I THINK THE RICH CHINESE ARE TAKING THEIR MONEY OUT OF CHINA AND BUYING USA EQUITIES AND THIS IS WHY OUR STOCK MARKETS ARE HIGHER THAN THEY SHOULD BE.
ULTIMATELY, IT WON'T HELP: WHEN CHINA'S REAL ESTATE BUBBLE BURSTS, IT WILL CAUSE A STAMPEDE IN THE USA, TOO -
AND SOONER THAN YOU THINK...