Financial Times informed on Tuesday, that George Soros, famous for his market-moving sterling trades, bringing the Bank of England to worries, has been warned by Beijing, that he should not start “war on the renminbi”
Beijing is now facing a need of wide-scale structural changes of the economy from an industrial one, what means that he keeps paying attention to the forex market and the national currency pressures as well. His foreign reserves were narrowed to $3.3T over the previous 1.5-year.
The question of Soros’ possible trading came after Bloomberg TV session, where he told reporters that he had bet against he S&P 500, Asian currencies and commodity-linked economies, while going long on US Treasuries.
Soros added for Bloomberg TV, that the East Asian economy was the “root cause” of the turmoil on global market, while deflation and excessive debt were mentioned as major risks. He mentioned, that China’s problems are “practically unavoidable”. Nevertheless, Soros said, that this could be a problem for countries’, which are hit by China’s deflationary impact. China all alone can sustain the change with its large reserves.
China’s officials and People’s Bank of China (PBoC) are trying to keep their currency as stable as possible but they could not stop its drop over 5% during previous weeks, mostly spurred by market worries over China’s future. Xinhua, official Chinese new agency published an official critics to “those who want to bet on the ‘ultimate failure’ of the Chinese economy”. It warned that such speculative attacks could face “higher trading costs and possibly severe legal consequences”.
Nevertheless, China’s PBoC is still spending its fx reserves to keep its currency relatively stable against the depreciation. President Xi Jinping confirmed in Davos, that there is no intention to weakn China’s currency.
Soros is still a figure that market keeps paying high attention to as he has been connected to massive selloff of the British pound in 1992 or to Asian crisis in 1997.
Albeit he has already retired officially, he is still a chairman of Soros Fund Management.
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