China's - still dumping the dollar

Doing it nice and slowly as they don’t want to spook the market too much

China’s holdings of US Treasury bonds fell to $775 billion in February, a drop of $22.7 billion from a month earlier, the second decrease this year, according to data released by the US Department of the Treasury on Wednesday.

They, and many other countries, have seen the dollar weaponized and are getting out.

As long as our trading partners accept Dollars for goods, it isn’t too bad. The Fed can buy up all the bonds with printed Dollars.

When the partners lose confidence in the Dollar, then the kimchee hits the fan.

Steve

The CNY is worthless. China has to sell US paper.

In exchange CNY is shoring up their central bank in USD.

China is a smaller player in the USD and in the US paper. China truly is insignificant.

https://stockcharts.com/sc3/ui/?s=%24CNYUSD

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It is completely fine. The US is a $26 trillion economy. 90% of all international trade is conducted in US dollars. China has to accept our dollars for their goods because they do not have an alternative. Then once they have a bunch of our dollars, they have to park them somewhere. China has been diversifying by buying more Euros and Canadian dollars. But they aren’t stupid. They aren’t buying Rubles or Rupees. Despite what you might have read on METAR, foreign entities are crawling all over themselves to buy US treasuries.

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I spelled out the scenario in another threat: a hypothetical where the US has another coup attempt, and a couple weeks where no-one is sure who is running things. That would shatter confidence in the US, and the Dollar.

Steve

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Meanwhile:

Chinese businesses are hoarding dollars because they expect their own currency to weaken, and that in turn is exacerbating a slide in the yuan that has been driven by wobbly stock markets and feeble growth in the world’s second largest economy.

This feedback loop has been playing out for months in mainland currency markets, spurred on by the dollar’s rising yield. Foreign exchange deposits have climbed $53.7 billion since September to $832.6 billion, People’s Bank of China (PBOC) data shows.

https://www.reuters.com/markets/currencies/chinas-cycle-dollar-hoarding-weakening-yuan-gets-vicious-2024-04-16/#:~:text=SHANGHAI%2C%20April%2016%20(Reuters),the%20world’s%20second%20largest%20economy.

Seems more likely to me that the Chinese government is being forced to reduce its dollar holdings in order to prop up the renminbi against all those Chinese people hoarding US dollars.

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Nice thing about hypotheticals is that you can come up with as many as you like.

Oney Hypothetical Generator ― Perchance

Maybe they just needed the money?

As I said in the other thread, ten years ago, it would have been unthinkable for the US to have another coup attempt.

Steve

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You’re so funny sometimes.
Foreign ownership of US Treasuries over the last year (as of February)
https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/slt_table5.html

As of February of 2023, foreign ownership of US Treasuries stood at $7.3 trillion.
As of February of 2024, foreign ownership of US Treasuries stood at $7.9 trillion.

I now return you to your regularly scheduled fear-mongering.

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There is nothing that can not be $crewed up.

Umm, if China is reducing their U.S. Treasury Bonds, that means they’re receiving a bunch of dollars.

Maybe they’re strapped for cash. Or maybe they found a better place to invest their dollars.

If they’re dumping dollars, I’d be glad to pick them up at a discount.

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Probably buying Russian oil.

Trust our reporters to find the actual news last.

It seems they have: