IN THE NAME OF ALLAH, THE MOST GRACIOUS, THE MOST MERCIFULL
NEARLY TOW DAYS AGO, MR, SHENG SONGCHENG,AN ADVISER TO THE PEOPLE‘S BANK OF CHINA SAID IN A STATEMENT "CHINA SHOULD NOT ALLOW THE YUAN TO FALL BELOW 7 PER DOLLAR OR ATTEMPTS TO STABILIZE THE CURRENCY WILL BECOME MORE COSTLY ON THE COUNTR‘S FOREIGN EXCHANGE RESERVES" ( CHINA IS SITTING ON $3.09TN, IN CURRENCY RESERVES , CENTRAL BANK DATA SHOWED ON (7/10/2018, LESS THAN 30% OF GDP
I AGREE WITH MR.SHENG ON WHAT HE SAID ABOUT IMPORTANT LEVE OF 7 YUAN PER DOLLAR, FOR THE FOOLLOWING REASONS
TECHNICALLY SPEAKING: 7 YUAN PER DOLLAR HAS BECOME PSYCHOLOGICALLY IMPORTANT LEVEL, MOREOVER....IF RICE BREAKS ABOVE 7, UGLY DOUBLE BOTTOM(EVE&EVE) IS CONFIRMED AS A VALID ONE,TO UPSIDE TARGET ROUGLY 8 YUAN, I EXPECT USD/CNY WILL HEAD DOWN TO 6.80 ,THEN 6.60, IF THE DOLLAR CONTINUES TO WEAKEN AS EXPECTED IN THE PERIOD AHEAD, THE DOWN MOVE WOULD BE EXTENDED NEAR 6.30
ECONOMICALLY SPEAKING: FALL BELOW 7 COULD RISK TRIGGERRING SPECULATION AND HEAVY CAPITAL OUTFLOWS , AND IF THE MARKET EXPECTED A FAST DEVALUATION, RESERVES WOULD THEN BE UNABLE TO PREVENT A DROP IN VALUE, CHINA-AT THAT TIME- WILL HAVE TO PAY A GREATER COST TO STABIIIZE EXACHANGE RATES
ASIDE NOTE: IT‘S IMPORTANT TO FOLLOW THE CHINESE ECONOMY NEWS, BEACUSE I BELIEVE THAT THE MINSKY MOMENT(A SUDDEN COLLAPSE OF ASSET PRICES AFTER A LONG PERIOD OF GROWTH, SPARKED BY DEBT OR CURRENCY PRESSURES) WILL OFTEN START FROM THERE
