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BoA / ML ask: Could China suffer a currency crisis?

Discussion in 'Fundamental Analysis' started by ForexLive, Mar 9, 2016.

  1. ForexLive

    ForexLive Forum Member

    Sep 2, 2015
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    Bank of America raise questions on the yuan, asking Could China suffer a currency crisis? But, and here's the good news, they answer the question too! If they panic and rush to the exit, there simply wouldn't be enough reserves to satisfy demand for US dollars. This could well become a second-generation crisis: if enough retail investors fear a crisis, it will be self-fulfilling. Of course, pinning down the timing of such an outcome is quite difficult. China bears have been calling for a hard landing for years; others have been forecasting a double-digit depreciation in the CNY since the second-half of last year. As is the case with all second-generation model dynamics, the crisis is not inevitable.

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