Steno Signals #96 - A major devaluation of the CNY could be imminent

China is preparing for something major. That seems increasingly obvious judging from the stockpiling of important resources. Could it be that they are preparing a major one-off devaluation of the CNY?

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China is preparing something BIG. That seems more and more obvious to me by the week now. The question is what that BIG thing is.

China reported a strong 5.2% YoY Q1 despite troubles on the ground, local financial institutions are hoarding bonds because of a weak credit demand growth picture and the Chinese authorities seem to be stockpiling like crazy.

We have seen plenty of tin-foil theories speculating in the reasons behind those Chinese actions, but maybe China is just preparing a major one-off devaluation of the CNY?

Let’s have a look at why a CNY devaluation is increasingly likely and how markets are likely to respond to such an event..

Chart 1: China is stockpiling copper like crazy