For a person to become strong, he needs enemies more than friends, and the same is true for a country. Yellen's recent surprising remarks at the Economic Forum turned Asian currency markets upside down for a while, and Japan had to intervene in the foreign exchange market after the yen hit a 34-year low, but now it has bottomed out twice and returned to the warning line of 155.
Not only that, the Vietnamese dong also fell into a "collapse", reaching a historical high of 1:25455, and nearly 3 percent of the international capital withdrew from Vietnam.
Because what the United States really wants to harvest is China, Yellen made it clear that she will do her best to curb the status of the RMB in the international monetary system, saying that the RMB has its own "circle", and Wall Street bears were demagogized by her remarks and shorted the RMB again, but the RMB is still as stable as an old dog, but the yen and the Vietnamese dong are on the verge of collapse again.
Yellen initiates a short order
Yellen, who is swinging at an important economic forum, openly exposed the United States' attempt to suppress the internationalization of the renminbi; and issued a drive to global capital to promote a new wave of RMB offensive.
Yellen further said that the Fed will stick to its tightening policy, pushing up interest rates to attract global dollar flows into the United States.
The move will undoubtedly serve as a catalyst to devalue the renminbi and other emerging market currencies, and she asserted that the United States will do everything in its power to curb the rise of the renminbi in the world monetary system.
International speculators quickly increased their positions in the short renminbi, causing the renminbi to plummet against the dollar and causing the yen to plummet to a record low of 160:1.
According to the Federal Reserve, Japan spent at least 9 trillion yen on the intervention in the foreign exchange market, as evidenced by the latest data on Japan's foreign exchange reserves, which is also confirmed by the fact that Japan's foreign exchange reserves have decreased by more than $10 billion.
Japan's move has been heavily criticized by Yellen, and in fact, Japan has intervened in Japan's exchange rate three times since the United States raised interest rates, the previous two times selling US bonds and buying yen.
This time, it is using the US dollar cash position in the foreign exchange reserves, which is all real money! After the first two Japanese interventions in the foreign exchange market to sell US bonds, two things happened in Japan.
One is the assassination of former Prime Minister Shinzo Abe, who supported the sale of U.S. bonds and proposed "Abenomics" to stimulate inflation in Japan, and the second is the dismemberment of the three major factions of Japan's ruling Liberal Democratic Party.
After these two incidents, Japan began to increase its holdings of U.S. bonds on a large scale, and the American "little brother" like Fumio Kishida completely began to look forward to the United States and discharge nuclear sewage to China.
In many cases, what we see is only a superficial phenomenon, and the financial dark war behind it is the undercurrent surging.
Judging from Yellen's criticism of Japan's intervention in the foreign exchange market, Japan's interests can be sacrificed when the United States needs it, and of course, the ultimate goal behind the United States is to harvest China and drag down the renminbi.
Not only that, Yellen also called on U.S. allies to strengthen the economic blockade of China in the fields of trade, investment, and science and technology to prevent China from upgrading its economic power through exports and technological innovation.
Yellen was outspoken in her reference to China's "renminbi circle," alluding to China's use of the Belt and Road Initiative and international cooperation to expand the use of the renminbi in international trade.
Yellen threatened that the United States will do whatever it takes to maintain the hegemony of the dollar and warned allies to stay away from the RMB settlement system.
Some of us have always believed that Yellen is the representative of the Biden administration's moderate wing towards China, but in fact, American politicians have their own political correctness of being naturally tough on China.
Yellen's comments inspired Wall Street bears to intensify their attacks on the renminbi and Asian currencies, especially those of countries with high economic dependence on China.
The depreciation of the currencies of these countries will lead the regional economy to fall into passivity, for example, our current largest trading partner is ASEAN, and it just so happens that the currencies of ASEAN countries have suffered a big depreciation.
Ahmed, Indonesian Institute of Economic and Financial Development, the Indonesian government has actually begun to implement a de-dollarization policy;
South Korea's foreign exchange reserves continue to hit a two-year low, and fears similar to the Asian financial crisis in 1997 have begun to spread in South Korea.
We have said many times in Japan that prices in Japan are soaring, a Chinese cabbage is close to 100 yuan, and two cucumbers are 50 yuan, which is why the Bank of Japan was forced to intervene in the Japanese foreign exchange market.
In addition, the latest data shows that China has surpassed the United States to become India's largest trading partner again, and the depreciation of the Indian rupee has also hit a record level. Malaysia's prime minister is even more adamant about the United States, saying that China is an ally and that cooperation with China will not be interfered with by any country.
The currencies of these countries are precarious, but the renminbi remains strong, appreciating more than 10% against the yen in 2024 alone.
Even so, we still can't take it lightly, because now we have reached the point of life and death, and it is no exaggeration to say that either the dollar fell to the altar, or global currencies, including the yuan, were harvested by the dollar.
In addition to the close ties between these countries and China's trade, it is more important that the renminbi can take the opportunity to "buy the bottom" before the dollar and save these countries, thereby promoting the internationalization of the renminbi.
The United States dug its own grave
Perhaps it was the strength of the renminbi and the inflow of dollars into countries that depreciated these currencies that prompted Yellen's hysterical warnings to keep her allies and these countries away from the renminbi settlement system.
Anyone with a discerning eye can see that this is a naked threat, but the financial systems of these Asian countries have actually reached a critical moment of life and death, and they will really take into account the feelings of the United States, and I think there is a high probability that it will not.
There are two reasons for the depreciation of the Vietnamese dong, one is the relationship between the US dollar and the other is the run on the Saigon Joint Stock Commercial Bank.
With interest rates in the U.S. now so high and the Fed less likely to cut them, and growing political tensions around the world, the dollar has been rising.
Vietnam, like many other Asian countries, has also depreciated its currency, in addition to the Vietnamese dong, there are also Japanese yen, Thai baht, Indian rupee, Indonesian rupiah, Malaysian ringgit, Philippine peso, etc., these Asian currencies have also continued to fall.
Prices in these countries have risen sharply due to currency depreciation, such as Japan, which has risen by 40% in more than a year, and as of April, it has risen 31 times in a row.
In addition, Vietnam's CPI in April alone increased by more than 4% compared to the same period last year, which is only a month, coupled with the fact that Vietnam's CPI grew by nearly 4% in the first quarter, and the Vietnamese people are miserable.
Vietnam is a typical export-oriented country, with exports to the United States accounting for more than 28% of all exports in 2023, according to the data, while China is Vietnam's largest importer.
The depreciation of the Vietnamese dong is actually due to the fact that Vietnam's economic structure and export structure are too homogeneous, and countries such as Vietnam and Indonesia have relatively high current account deficits, inflation and external debt levels.
Therefore, the currency depreciation is very serious, and the interest rate of the dollar is as high as 5.5%, which makes it more difficult to repay and pay interest, which poses a great risk to economic stability.
At present, the total investment of international capital in Vietnam has decreased by nearly one-third, and more than 100 billion VND funds have been withdrawn from Vietnam.
In April, Vietnam's real estate tycoon, Truong My Lan, was sentenced to death by a Vietnamese court on suspicion of fraud.
The amount of money she was involved in was as high as 44 billion US dollars, of which 27 billion US dollars could not be recovered, which caused a run on the Saigon Commercial Bank, and the foreign exchange that was exchanged for this blood and sweat flowed smoothly to the United States.
It is unreasonable for the United States to make the countries that use the dollar pay for it because of its own economic cycle and monetary policy.
When it comes to the dollar and the renminbi, they are two of the world's most powerful currencies, and their relationship is complex, with a history of cooperation, such as China's massive increase in US Treasuries after the subprime mortgage crisis.
But now it's more of a confrontation, which is not what China wants, and many times we can only passively accept, but this passive acceptance and counterattack have instead contributed to the internationalization of the RMB.
As the saying goes, a person's development and strength need more enemies, not friends, this sentence was said by the German philosopher Nietzsche.
Take China as an example, the heavily printed dollar has actually become an excellent tool for us to buy the bottom around the world.
For example, theoretically, if the Fed prints a large amount of money with a wave of its hand, then the money can go to the world.
But that's not the case. Much of this newly created money doesn't actually go back to the United States.
This is mainly because the industrial competitiveness of the United States is not good, and the manufacturing industry is declining, so everyone likes to find Chinese suppliers when buying things, and as a result, the money that should have returned to the United States has gone to China, giving us the opportunity to use this advantage to buy the bottom.
In fact, we have seized the opportunity of the depreciation of the US dollar, slowly improving the status of the RMB in the international community, and helping more countries to stop relying on the US dollar.
For example, Saudi Arabia chose to borrow the renminbi and buy Chinese assets when Asian currencies were not very strong, and Argentina's foreign minister also came to China to find a way to expand the currency swap agreement with China to solve the problem of insufficient dollars.
This shows that China's currency swap agreement has helped many countries tide over the difficulties of the dollar shortage.
In this global economic environment, the renminbi is skillfully resisting the hegemony of the US dollar and promoting a more stable and diversified global economy, thereby consolidating its position, and financial stability, in turn, promoting the development of our country's import and export trade, prompting China's further rise.
Information sources:
"1 in 25455! How did the Vietnamese dong exchange rate hit a record low and international investment in Vietnam has fallen by 30%? National Business Daily
"Indian Think Tank: China Surpasses the United States to Become India's Largest Trading Partner Again", China Economic Net
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