• Ernie Diaz

The All Flighty Dollar

Where there's smoke, there's fire. Unless it's Fed Chairman Jerome Powell chain smoking, hoping the clouds cover up increasing inflation. But the first phase is here - spiking commodity prices. 

Another sign is the Chinese yuan strengthening to levels not seen since '16, and set to be pushing 6.2-to-the-dollar, according to Citic Securities. Not a bold prediction: the Biden's administration's fiscal policy must perforce remain looser than a pair of Tesla brakes. As to China having to keep closely pegged, enter the digital yuan, not for replacing the dollar, but for a trial separation - see other markets on their own terms.

"Don't forget the spike in foreign investment into China, driving the yuan's appreciation," says Edward Lehman, referring to a total of almost $37 billion in Q1 2021 for tech and service industries alone, more than a 50% increase YoY. "What with a maturing financial industry and loosening regulations on FDI options, we're finding interest in China investment at highs rivaling the early WTO days. Foreign invested enterprises are up almost 50% too, over 10,000 so far this year."

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