The consequences for the US from the devaluation of the Chinese Yuan
The devaluation of the Yuan is setting in motion events that will directly affect the US economy. Saxo’s chief economist Steen Jakobsen says the consensus on the recycling of excess capital from Asia to the US bond market will change. There will also probably be “a significant reduction in China’s $3.6 trillion in FX reserves”. So a significant effect reducing reserves in China is that “the US will get less help to finance its deficits from Asia and the price paid for this will be a continued rise in the cost of capital”, which can already be seen in bond yields. But China is not diminishing reserves to have less money. Saxo’s chief economist explains that this is the cost China is paying for executing a bigger plan (which, by the way, with $3.4 trillion of reserves it can afford). So yes, China has a plan. If you’d like to know about it visit: (VIEW LINK)
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