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They are not trying to maintain their currency peg. They are slowly devaluing to eventually decouple (see IMF year delay comments). The treasury sales, which
by beauzero 11y ago
They are not trying to maintain their currency peg. They are slowly devaluing to eventually decouple (see IMF year delay comments). The treasury sales, which no one other than China really knows why, are continuing at an extremely rapid pace and the best guess is they are using it to inject liquidity into their market in order to prop up their stock market bubble.
- dageshi 11y agoThe Chinese care more about the ability to "control" their peg than they do anything else. What they don't want under any circumstances is a black market exchange rate that differs substantially from the official rate. Because once you have that the government no longer controls the exchange rate. So they have devalued a relatively small amount and now they must maintain the peg at the new level, if that means selling a boat load of treasuries to do so, so be it, that's the purpose of holding the treasures. To your point on selling USD denominated debt to prop up the stock market.. why? They Chinese stock market is denominated in Chinese Yuan, not USD, if they wanted to prop up the market they could just print the yuan and buy stocks, they don't need to sell Treasuries at all to do that.