Dollar Intervention Causes Yuan Plunge, Global Currencies Hit, US Debts Slide

In this world, there are many countries where even after raising interest rates, the value of their currency does not necessarily appreciate. However, the mere hint of an interest rate hike from the United States has already led to a significant appreciation of the US Dollar Index.

The Federal Reserve leverages the strong position of the US dollar by repeatedly raising and lowering interest rates, guiding the appreciation and depreciation of the dollar's exchange rate. This results in the flow of international capital back and forth, a process through which the dollar harvests wealth from other countries.

Now, the dollar is poised to make another move, and this time, it is highly likely that there will be another interest rate hike of 75 basis points. Global currencies have already experienced a significant devaluation in recent times.

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Before the weekend, the US Department of Labor released a new set of non-farm employment data, which was slightly better than market expectations. This means that the Federal Reserve essentially has all the conditions in place for a 75 basis point interest rate hike.

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Prior to this, the US Dollar Index had already recovered from a low point and rapidly increased. In just three weeks, it rose from below 105 to over 110 as of yesterday. There was a slight回落之后, it remains at a position of 109.6.

The US Dollar Index represents the average exchange rate changes of the dollar against six major Western currencies. The continuous rise means that the currencies of the corresponding six countries have depreciated to varying degrees.

Currently, the exchange rate of the euro against the US dollar has fallen to 0.9968, a rate that has long since broken through 1. One US dollar can be exchanged for more than 140 Japanese yen, which also shows that the yen has rapidly depreciated in recent days.

In addition, the Swiss franc, Canadian dollar, and Swedish krona have all experienced不同程度的下跌.In the process of the continuous appreciation of the US dollar, the Chinese yuan has also experienced a significant devaluation, with the current exchange rate of the yuan hitting a new low in the past two years. Just two days ago, the US dollar even broke through 6.93 against the yuan, and the onshore market also broke through 6.92.

The continuous interest rate hikes by the US seem to be a response to the current high inflation, but in reality, they are causing the US dollar to continuously appreciate, leading to the devaluation of other countries' currencies and thus causing funds to continuously flow into the United States.

In order to attract funds to flow into the United States more quickly, the US has even secretly promoted conflicts in Europe and subsequent sanctions. It is under this big background that a large amount of funds from the eurozone have flowed to the United States out of the need for risk avoidance.

Has there been an outflow of funds from China?

An appropriate devaluation of the yuan is beneficial for export trade, but if the devaluation is too large, it will affect the confidence of overseas investors and cause them to sell off Chinese assets.

However, at present, this phenomenon has not yet appeared. Regardless of the inflow of funds from the northbound funds of A-shares or the trend of Chinese concept stocks in the US stock market, there is not only no selling of Chinese assets, but there has even been a significant net purchase.

On the contrary, many overseas investors are now accelerating the sale of US assets, including US Treasury bonds and US stocks.

Since the beginning of this year, the US stock market has experienced wave after wave of declines. It was not until June that it finally stabilized and experienced a certain increase, with the gains of the three major stock indices reaching 10% to 15%. However, starting from mid-August, the US stock market has experienced a new decline, and in the last three weeks, it has been continuously declining.

Similarly, in August, the average price of US Treasury bonds fell by 2.2%. From this perspective, we can also see that investors are selling US bonds, and there is an oversupply in the bond trading market, so the bond prices have fallen.In the past two days, the two-year U.S. Treasury yield has even risen to its highest level since 2007, indicating that U.S. Treasury bonds are still in a continuous decline.

Of course, the decline in bond prices has also led to an increase in U.S. Treasury yields. However, due to the fact that inflation in the United States remains at a high level of 8.5%, the U.S. Treasury yield, even after breaking through 3%, is still far below the inflation rate. The real yield of U.S. Treasury bonds is now more than negative 5%. This further leads to more severe selling.

In the data released by the U.S. Department of the Treasury, we see that central banks around the world are selling U.S. Treasury bonds, but individual investors in the United States are actually increasing their holdings of U.S. Treasury bonds.

If institutions sell and individuals take over, and the selling pressure continues to intensify, leading to a collapse of U.S. Treasury bonds, then ordinary American families will truly become the last ones to take over the baton of being harvested by U.S. Treasury bonds.