Sep 13, 2022Liked by Russell Clark

Russell, long story short

Is the new widowmaker trying to short the Yuan instead?

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Great thought piece, Russell. There is indeed a conundrum.

CNY is strengthening big way against KRW and JPY almost last two years (since covid?) while it is still being a major exporter to both of them. It is basically exporting inflation to them, given what it exports, from what I tell, are relatively important electronics components and parts, (intermediate goods?) for their respective economies.

Meanwhile, CNY started to weaken against USD, which is deflationary across the commodities/industrials segment (think about cheap CNY costs in them. Remember, despite Chinese major imports of commodities, it is still a very major producer itself, too, even in coal, iron, aluminum etc.). This is certainly bad for commodity exporting EM and industrials exporting Europe. It may actualy be welcome by US and some parts of the world, given the inflation fight.

I am tempted to say that it seems like culprits are Japanese and Koreans, preemptively devaluing their own currencies against everyone... But then again, I see similar moves in other EM countries, too. USD stretghening against all, including CNY whie CNY has not reacted until very recently.

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So you think that might be enough to reverse the yen weakness, if confirmed?

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Russell my understanding is that there have been(and still are to some extent) travel restrictions into Japan for tourists?

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