In recent days, the news of the yen being massively shorted has been flooding social media. It's not just Japan; the exchange rates of all Asian currencies are facing the risk of a complete collapse.
Why has such a massive situation suddenly emerged? What on earth do the Americans want to do? It's highly likely that this could be the last desperate plan of the Americans in this round of dollar interest rate hikes.
In the past few days, the yen has plummeted significantly, breaking the critical level of 154, and hitting its lowest point since 1990.
Exchange rates are the backbone of a country's asset value. The sharp decline in the yen exchange rate has led to a panic sell-off in Japan's entire capital market, creating a situation where currency, stocks, and bonds are all hit.
In addition to Japan, South Korea, India, Vietnam, and Indonesia have also recently experienced significant currency devaluations. Here are the data for April 16th.
In South Korea's Seoul foreign exchange market, the won exchange rate broke through the 1400 won per US dollar mark, which was around 1300 in January.
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The closing exchange rate of the Indian rupee against the US dollar was 83.69, breaking through the November level of 83.50, and falling to a historical low.
The Vietnamese dong exchange rate once fell to 25,295, setting a new historical low.
The Indonesian rupiah is one of the Asian currencies with the most severe decline, plunging more than 2% on the day, reaching a four-year low.
Such a frantic situation is likely the most brutal financial event since the 1998 Asian financial crisis.There are indications that major US dollar bears are massively shorting the main currencies of Asia, with the Japanese yen being the primary target.
Currently, global wealth is concentrated in three major economic centers: North America, Europe, and East Asia, with East Asia being a battleground for the US dollar.
However, the stability of East Asia and the entire Asian region this time is due to Japan and China's refusal to follow the US dollar's interest rate hikes, significantly diminishing the impact of the US dollar's rate increases.
This has effectively led to a large influx of cheap yen and renminbi, as well as US dollar foreign exchange, from these two countries into surrounding Asian nations, propping up the entire Asian situation.
Since the yen is also playing a supporting role, once the Americans realized this, they started with the yen.
Major US dollar bears had already gathered in Japan; as early as the week of April 2nd, the net short position of yen held by leveraged funds and asset management companies increased to 148,388 contracts, the highest level since January 2007.
From April 4th to 9th, US Treasury Secretary Yellen visited China. As soon as she left, the large-scale shorting of the yen and Asian currencies began, with such a coincidental timing. Is there some kind of connection here?
Could it be that the Americans, failing to seek peace, have initiated their final desperate plan?
The sudden large-scale shorting of Asian currencies by the US dollar bears this time, apart from harvesting the assets of these countries, also aims to create panic in the Asian capital markets and drive Asian risk-avoiding capital further towards the United States.
More importantly, they want to push the US dollar to strengthen further, creating conditions for US dollar interest rate hikes. This is because they are very afraid that if the US dollar lowers interest rates, it will significantly devalue.On April 17th, the U.S. dollar index saw a rapid increase, rising to around 106.50, setting a new high for November 2023 for two consecutive days and reaching a five-month high for three consecutive days.
At the same time, the Chinese yuan appears to have slightly depreciated, but in reality, it is appreciating in a hidden manner.
On April 16th, the Chinese yuan exchange rate fell from 7.1264 at the beginning of the year to 7.2618, a depreciation of 1.93%. However, during the same period, the U.S. dollar index appreciated from 101.31 at the beginning of the year to 106.25, an appreciation of 4.88%.
The difference between the two is 2.95 percentage points, which means that although the Chinese yuan has depreciated by 1.93% against the U.S. dollar, it has appreciated by 2.95% against other major currencies in the world.
If the U.S. dollar interest rates are lowered and the U.S. dollar index falls, this hidden appreciation will become an actual appreciation of the Chinese yuan against the U.S. dollar.
Theoretically speaking, if the U.S. dollar index falls to the level at the beginning of this year, the Chinese yuan against the U.S. dollar will appreciate to a level of about 6.9 to 1. If the U.S. dollar index falls below 100, the Chinese yuan will recover to a high level of around 6.8.
The big short sellers of the U.S. dollar are creating turmoil, causing a significant depreciation of major Asian currencies, an appreciation of the U.S. dollar, and the Chinese yuan is also appreciating in a hidden manner. This also means that international capital that has recently bought U.S. dollars and Chinese yuan has increased.
In other words, the Asian capital market storm has generated a large amount of risk-avoiding capital, which may mostly flow to the United States, but a portion of it is also flowing to our China.
This is the national fortune. Americans can never undermine our strength in the economic foundation, nor can they shake our national security and stability. This is the confidence of the Chinese yuan exchange rate.
This is also why, since the beginning of this year, the United States has been constantly causing trouble around us, attempting to create regional turmoil and disrupt the flow of capital. However, despite their continuous provocations, the situation has always been stable, and these conspiracies have all failed.Therefore, national security and stability is the greatest happiness and freedom for the people, and we should be grateful to be Chinese.