Dow plunges 875 points after China devalues its currency

CNN Business ^ | Aug. 5, 2019 | Anneken Tappe

[Starboard]

FYI. I’m not as informed as you are on Hong Kong but the situation there seems to be escalating.

https://www.zerohedge.com/news/2019-08-05/hong-kong-unravels-flights-canceled-police-stations-set-fire-and-triads-are-back

[Zhang Fei]

devaluing one’s currency means you can buy less from other countries and you have to export more to just keep even or else it lowers your living standards so, yes the communist Chinese can do this awhile...but it has as many adverse impacts on their own country as it does anyone else

So far it's worked out pretty well. Assuming the country's economic policies are mostly sound in other respects (i.e. not like Zimbabwe's), devaluations do improve a country's competitive position. Here's China's USD-CNY exchange rate history:

World Bank annual average middle exchange rate for US dollar to Chinese yuan[8] ( 1 US dollar to Chinese yuan )
Year	US dollar	Year	US dollar	Year	US dollar	Year	US dollar
2019		2004	8.2768	1989	4.9400	1974	1.9612
2018	6.98	2003	8.2770	1988	4.8600	1973	1.9894
2017	6.89	2002	8.2770	1987	4.4600	1972	2.2451
2016		2001	8.2771	1986	3.4500	1971	2.4618
2015		2000	8.2784	1985	2.9400	1970	2.4618
2014		1999	8.2783	1984	2.8000	1969	2.4618
2013		1998	8.2791	1983	2.6100	1968	2.4618
2012	6.3123	1997	8.2898	1982	2.6200	1967	2.4618
2011	6.4615	1996	8.3142	1981	2.5200	1966	2.4618
2010	6.7703	1995	8.3507	1980	2.4000	1965	2.4618
2009	6.8300	1994	8.6187	1979	2.3000	1964	2.4618
2008	6.9451	1993	8.0213	1978	2.4600	1963	2.4618
2007	7.6075	1992	6.3700	1977	1.8578	1962	2.4618
2006	7.9734	1991	5.7400	1976	1.9414	1961	2.4618
2005	8.1943	1990	5.2300	1975	1.8598	1960	2.4618

If you examine the numbers at this link, you'll note that China went from dead even with India (and in the bottom 10% of all countries) in the late 70's, to 4x India's economic output per capita a few years ago, and the top third of all countries listed. Currency valuations are key to a country's competitive position, which is why so many countries with big trade surpluses against the US keep their reserves in dollars, and buy Treasury bonds with those dollars to earn some interest. Because to sell those dollars means their currency goes up, making their goods more expensive in the US market.

[xkaydet65]

Japan was never close to being the economic power China is. China has invaded US markets both product wise and financial to undreamed of extents. Extents even modern Japan could have only have fantasized about.

[M Kehoe]

Hi.

Please indulge me for a moment regarding Econ 101. The study of scarcity.

I might get into other econ issues, but right now let’s talk about economics 101...

Feeding a billion people can be problematic. Second, you have to have the ENERGY to feed those people. China has very little oil, natural gas, coal, uranium or hydro electric...

The Chicoms have many problems even while devaluing the Yuan, and making their products less expensive.

Methinks the Donald is squeezing Xi’s gonads.

5.56mm

[HamiltonJay]

oh nos.. the sky is falling.... (rolling eyes).

Wall street is not full of wolves, its full of cowards IMHO.

Never met a more knee jerk bunch of pansies in all my life than the traders I know.

[central_va]

The only group of snow flakes bigger than traders(traitors) are farmers.

[Innovative]

Whatever it takes, just so it will all be good in the end.

We may have to go through some turmoil, some of it is economics, but some of it isn’t.

[I want the USA back]

Opportunity to buy. The media always promotes doomsday scenarios.

[familyop]

Show us some products made in America, so we can bring about a better kind of correction.

[fella]

Does this mean that their people’s money will buy less over there?

[Farmer Dean]

I resent your comment.You don’t know me.

[central_va]

Farmers (2% of the workforce) and their bought off politicians continue to hold this counties open trade policy hostage over soy bean exports. I know which side bi ag is on..

[Farmer Dean]

1.Prove that statement.
2.I’m a small operator.
3.Don’t lump me into any group,I don’t like it.

[Sirius Lee]

And you are basing this on what?

Historical precedent. It was only a few years ago that folks were saying we'd never see a DOW20K.

The chicoms are going to have to resort to nationalizing left and right as a result of President Trump's beat down, and the smart money is going to flow into the U.S.

[trebb]

Any song in particular?

[Reno89519]

Bet it goes up at least 300 points tomorrow.

You were right! Up 312 points today. Got any stock picks or lottery numbers to recommend?