China: Currency Games Play Politics Ahead of the G20

The G20 Meeting and China

It’s more than interesting, the games China is playing with its currency ahead of important political gatherings smells to high heaven.

The Chinese yuan has cheapened (devaluation) 7.5% over the last year.  China has been trying to pull off this stealth deval instead of large scale aggressive action.  In other words, they’re taking small bites of the apple as opposed to one big bite.  Get our 10 page report on the next China devaluation and what it means for U.S. equities here:

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As you can see in the chart below, when their bites get to large global stocks don’t like it.  The S&P 500 dropped 13.5% two weeks after China’s first meaningful devaluation in years last August.

It’s no surprise, the yuan mysteriously stopped a six-week run of losses just before Group of 20 finance chiefs get together in China’s Chengdu city July 23-24.

China’s Yuan Devaluation over the Last Year

Yuan Trends

History shows that the Chinese currency usually strengthens ahead of major political or economic events, such as President Xi Jinping’s state visits to the U.S. and the Boao Forum. The People’s Bank of China raised its daily reference rate for the yuan in each of the last three days, spurring speculation it is acting to limit losses in the currency. – Bloomberg

Big impact on U.S. stocks.  We see a 15% devaluation over the next year, click on the link below to find out why:

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