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US Treasury: Vietnam Intentionally Devalued Currency

A investigation by the US Treasury targeting Vietnam discovered that in 2019, the country intentionally weakened its currency by around 4.7% to the dollar.

This information comes from a letter to the US Commerce Department. 

Vietnam’s central bank, the State Bank of Vietnam, allowed net purchases amounting to $22 billion in foreign exchange, which led to undervaluing the Dong by 4.2% to 5.2%. 

Consequently, the purchases pushed the country’s real effective exchange rate by around 3.5% to 4.8%.

The treasury evaluation forms part of a Commerce Department investigation surrounding alleged subsidies on light truck tires and passenger vehicles from Vietnam. 

According to a new federal directive established this year, the US Commerce Department has the liberty to view currency undervaluation as a determining factor in countervailing duties on a trade partner. 

There has been no response from the Vietnamese Foreign Affairs Ministry, but on Wednesday, the Ho Chi Minh Stock Index fluctuated.

Do you think this lack of response from Hanoi is a sign of guilt?

China to Purchase Record Amount of US Soybeans

The relations between China and the US haven’t been on the best footing, but that hasn’t stopped one of the biggest trade deals. 

The Chinese are set to purchase a record-breaking amount of U.S soybeans in 2020, and the reduced prices will aid China in boosting purchases agreed on under Phase One of the trade deal.

The total quantity emanating from America would possibly reach around 40 million tons this year.

According to the US Department of Agriculture, this amount would be approximately 25% more than in 2017, the baseline year for the agreement, and around 10% over the 2016 record.

China has stepped up the buying of US agricultural goods since the end of April. Soybean sales slated to be delivered next season are at an all-time high for this time of the year since 2013. 

This week, China and the US reiterated their obligation to Phase One in a biannual review.

Even amid escalating tensions between the two countries on various issues, don’t you think that there is a willingness to continue trading together?

Australia Historic $21 Billion Bond Sale

In a third record-shattering sale in 2020, Australia sold $15.1 billion ($21 billion AUD) in fresh 11-year sovereign bonds.

According to the Australian Office of Financial Management, the 1% bonds due in November 2031 have a yield of 1.055%. 

Also, over $66 billion AUD bids were received – another record.

This incredible demand underscores a significant appetite from investors for yields, as alternatives decrease globally and policy experts cutting rates to deal with the COVID-19 pandemic. 

Interestingly, among the Group-of-10 countries, Australia’s debt ranks number two in yielding, and it is underpinned by its central bank’s yield-curve control policy.

This recent sale comes after historic offerings worth $13 billion AUD in April and $19 billion AUD in May for a 2024 bond and 2030 debt, respectively. 

As a testament to just how much COVID-19 pandemic has wreaked havoc on economies globally, Australia bond sales in 2020 amount to $180 million AUD, compared to less than $52 billion AUD in the entire 2019 period.

Alibaba Stocks Skyrocket Following Ant Group IPO Filing

On Wednesday, China’s e-commerce giant Alibaba stocks climbed to new highs, just one day after its financial technology division filed documents for a joint Hong Kong and Shanghai listing.

The Initial Public Offering for Ant Group is currently being viewed as one of the globally most significant listings, with the potential to surpass the historic $29 billion raised by Saudi Aramco in 2019. 

Ant Group filed the documentation on Tuesday evening, although it didn’t give a timetable for the IPO or the expected amount it plans to raise.

When the market took a lunch break, Alibaba’s Hong Kong stocks had risen 3.57% at HK$278.8.

Alibaba, owned by billionaire Jack Ma, is the largest e-commerce conglomerate in China, and it is listed in both the New York and Hong Kong stock exchanges. 

While filing, Ant Group said that the proceeds from the IPO would be utilized in expanding cross-border payments and increasing its R&D capabilities. 

With the increasing tensions between China and the US, do you suppose that the Chinese giant thinks that a joint listing closer to home is the best idea?

Major Chinese Banks Faced with $940 Billion Capital Shortage

The four biggest banks in China are experiencing a financing gap amounting to trillions of Yuan, according to an S&P Global Ratings report on Wednesday. 

These funds are intended to match capital requirements worldwide and to protect the financial sector from massive devastation.

Agricultural Bank of China, Industrial and Commercial Bank of China, China Construction Bank Corp., and Bank of China, all viewed as globally systematically vital banks had a total deficit of $323 billion (or 2.25 trillion Yuan) in 2019 to adhere to entire loss-absorbing capabilities.

Total earnings for the over 1,000 commercial banks in China faced the worst slump in over ten years in the second quarter as bad loans increased astronomically. 

Considering that the major banks were requested by the government to come in and salvage the situation and assist floundering businesses, does it explain why they are the hardest-hit?

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