Yesterday, the offshore exchange rate of the Chinese yuan once again surged significantly, just a hair's breadth away from the 7.0 mark, reaching a high of 7.0052 at one point, setting a new high since its decline to 7.37.
Over the past week, global foreign capital has been aggressively purchasing Chinese yuan assets, not only buying a large amount of yuan but also purchasing Chinese stocks, including A-shares, Hong Kong stocks, and Chinese concept stocks, in addition to continuous purchases from the bond market and real estate.
In contrast, the US dollar, which has been intent on harvesting the wealth of other countries, has been continuously retreating despite the support of future interest rate hikes.
01, Chinese Yuan Soars
On Monday of this week, the yuan depreciated by as much as 500 points, but starting from Tuesday, the yuan launched a major counteroffensive, with a gain of 2000 points in just two trading days on Tuesday and Wednesday, and continued to rise slightly on Thursday.
However, yesterday the yuan initially fell to 7.06, then began to rise in the opposite direction. After 20:30 Beijing time, the yuan rose to its highest point of 7.0052, just a step away from the 7.0 mark.
But then, due to the release of employment data in the United States, the yuan experienced a rapid decline.
Ultimately, it is China's strong economic situation that determines the exchange rate, so the yuan strengthened again.
This also led to a rollercoaster ride for the yuan exchange rate yesterday, but overall, it still rose by 176 points for the day, and the yuan rose by 1731 points for the entire week.
02, Dollar Harvesting FailsThe previous devaluation of the Chinese yuan was entirely caused by the continuous interest rate hikes by the US dollar.
Starting from March of this year, the Federal Reserve entered an interest rate hiking cycle, citing the need to suppress inflation through rate hikes, but the actual purpose might be to harvest global wealth.
Past experiences have shown that whenever the US significantly raises interest rates, it is inevitably followed by a wave of wealth harvesting from other countries.
The appreciation of the US dollar means the devaluation of other currencies, which in turn raises inflation in other countries and conveniently transfers the high inflation in the US.
Economists point out that after the US dollar's interest rate hike, the exchange rate scissors difference allows the US to easily push up inflation in other emerging and developed countries. As long as imports of dollar-priced commodities, such as food and energy, are involved, inflation will be passively imported.
This year, the Japanese yen, South Korean won, and other Asian currencies have already experienced significant devaluation, and inflation in many countries is getting higher and higher.
After the inflation in the US began to bottom out, inflation in Europe continued to rise, with the latest published PPI data reaching 30.8% year-on-year, which also shows that even developed countries are not immune to disaster.
However, perhaps the Federal Reserve has used this move too many times, gradually losing its effectiveness. This time, before the US had time to harvest on a large scale, the interest rate hike has already led to significant problems in its own economy.