Goldilocks and Seeds of Wisdom
“Chinese authorities told state-owned banks to step up intervention in the currency market this week, in a push to prevent a surge in yuan volatility, according to people familiar with the matter.”
In 2023 until now, The People’s Bank of China has been manipulating their currency exchange rate more than usual. As the dollar has become more unstable, their State Banks have stepped up to the plate to buy some of their assets from the markets themselves to stabilize the Yuan.
Several tools have been utilized to control their currency fluctuations as of late, and the Exchange Stabilization Fund has been called in to assess the situation and give them supportive direction. “China academic calls for US $1.4 trillion stock stabilisation fund.”
As the global wars continue to expand, the volatility of all the Global Markets are beginning to create havoc in the foreign currency exchange markets. Currency interventions like these are common during wartime efforts.
This is why old play books no longer apply when distortions in the market begin to affect economic stability and job creation opportunities.
The BRICS Nations, of which China belongs, sets them apart through a backing of gold to support their local currencies. These efforts adds to the net worth of a country’s revenue holdings.
The use of gold to stabilize currency exchange rates and demand bring in greater value in exchange processes between countries.
As Global wars continue to expand, you can expect a rise in volatility inside the Markets and Forex. Old contracts between nations may no longer hold accurate trade values going forward. Look for gold and other Exchange Stabilization Fund interventions to come into play.
© Goldilocks
CFR
NCUA
TheEdgeMalaysia
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