China’s Reserve Coverage of M2 Slips to 12.4pc

The yuan is rising, but there’s no fundamental pressure pushing the yuan up. It is solely dollar weakness. Chinese FX reserves are down to 12.4 percent of M2. This number does not matter to the markets and it may never matter if the fundamentals reverse, but we’re getting within striking distance of 10 percent.

The Chinese government cracked down on overseas acquisitions, requires paperwork for foreign currency transactions over $147 and told multinationals not to take their money home for a reason, and it isn’t because the yuan is fundamentally strong. The yuan was more useful three years ago.

Author: 罗臻 http://www.investinginchinesestocks.blogspot.com

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