Unexpected bad news, China took action, the RMB plummeted 300 points, is a new crisis about to begin?
I thought that the period before the handover in the United States would be the calmest, but unexpectedly, all kinds of bad news came from around the world. First, the ruble plummeted, and then the Mexican peso also hit a record low. I thought that considering China's size, the decline of the ruble and peso was just a coincidence.
However, what was unexpected was that the RMB has plummeted recently. Not only did it break through 7.29, it also went straight to around 7.31, and even plummeted by nearly 300 basis points in a single day, hitting a new low in nearly a year. Is the United States going to take action in advance? Is a new crisis about to begin?
Unexpected bad news, the RMB plummeted
If we talk about which currency is the strongest, the RMB definitely has a place, and during the process of the US interest rate hike, it has held the key point of around 7.35. However, unexpectedly, when the Fed cut interest rates, the RMB began to plummet, falling by nearly 300 basis points. Is a new US offensive coming?
Recently, according to relevant media reports, the RMB, which has always been strong, suddenly plummeted, and even broke through the key point of 7.31 in one fell swoop, and even plummeted by nearly 300 basis points in a single day. It can be said that such a scene is rare in recent times.
Because we all know that the United States is currently in a cycle of interest rate cuts, so comparatively speaking, the US dollar index should be declining while other currencies should be strengthening.
After all, in the process of the United States cutting interest rates, the interest rate gap between the United States and other countries will definitely narrow. This will cause the global capital that originally went to the United States to earn interest to choose to flow back to developing countries for investment. After all, the asset prices in the United States are already very high.
However, a strange situation has emerged at the moment. The US is cutting interest rates, but the US dollar index is constantly strengthening, while currencies of other countries are falling. Even currencies that have not hit new lows during the US interest rate hike have been breaking through the bottom line recently.
First, the Russian ruble plummeted by about 8% in a single day, and then fell by nearly 12% overall. If we say that Russia is an exception, after all, Russia is under sanctions, then other currencies are not.
So we see that Mexico, as a neighbor of the United States, has experienced a sharp drop, with a single-day drop of nearly 2%, even setting a new low in the past two years.
Now the RMB has also experienced a big drop, with a single-day decline of nearly 300 basis points. It has fallen from the lowest point of around 6.9 to around 7.31. The comprehensive decline has reached nearly 3,000 basis points. All of this has happened since the United States cut interest rates.
In contrast, the U.S. dollar index has continued to set new highs recently, rising directly from around 100 to around 108, which is only 6 points away from the highest level of 114.
Some people may think that the rise of the US dollar index is due to the increase in global risks, and global capital has chosen the US dollar for risk aversion. However, when it comes to risk aversion, gold is the main product for risk aversion. However, we can see that gold has not risen, but has continued to fall.
All of this indicates that the United States may be brewing a major crisis. Because the United States is basically unable to harvest the dollar, and to re-harvest it, it must create a tense situation externally. Only in this way can the originally weak dollar appear more cost-effective, which means that the United States will begin to pass on the crisis.
A new crisis is about to begin?
The interest rate hike is just a preview of the crisis, while the interest rate cut is the real beginning of the crisis. For the United States, it can either raise interest rates to hurt other countries and let the crisis break out outside the United States, or pass on its own crisis in the process of cutting interest rates. After all, the crisis will not disappear out of thin air, it will only be transferred in one way.
Before the United States raised interest rates, it relied more on the Federal Reserve's interest rate hikes to create a siphon effect, thereby attracting global capital to flow into the United States, thereby draining liquidity from developing countries and then hitting exports to put developing countries into crisis.
Because in this way, American capital can take the opportunity to reap the profits and finally fill the hole in the United States. Now we have seen that the US interest rate hike has not achieved this, so there is only one situation left for the United States, that is, worse than worse.
Since everyone has seen that the United States is a bad place, can the United States make the environment outside the United States even worse? Therefore, we have seen that the recent conflict between Russia and Ukraine has a tendency to escalate, and the United States has even lifted the ban on Ukraine. In addition to the conflict between Russia and Ukraine, we have seen that the Middle East is even more crisis-ridden.
First, the situation in Syria suddenly became problematic, and then there were protests in Georgia. These events were all very coincidental. They didn't happen earlier or later, but they happened now.
In addition, we have seen that although Trump has not yet taken office, he has taken action very frequently. First, he wanted to impose tariffs on China and Mexico, and then the United States said it would impose sanctions on Chinese companies. The number of companies sanctioned has reached nearly 140.
In addition to this kind of action, the Federal Reserve's attitude has also been volatile, and its attitude has become increasingly tough recently. All this shows that the United States wants to pass on its own crisis, and this method may no longer be accomplished by the dollar tide, but through other means of the United States.
For us, what we are competing with the United States at the moment is stability. As long as our economy is stable, the countries that trade with us will be stable. After all, we are the largest trading partner of 150 countries and regions. Therefore, we need to be more stable at the moment.
The reason why the world is in a panic right now is that people are unsure about Trump’s attitude in the future. Everyone knows that Trump is tough enough, and Biden is also willing to stir up trouble. He will inevitably create all kinds of chaos at the last moment, so this moment has become the most dangerous time.
We are even more regarded by the United States as the world's biggest challenger, so the United States will definitely use all means to attack us. Therefore, we must be fully prepared at this time to prevent Biden's final fight to the death, and also to prevent Trump's unexpected sneak attack. After all, only by knowing yourself and the enemy can you win every battle.
