The Chinese yuan is slipping again and threatening to break down. The last few weeks has seen a very steady decline in the currency and today it has hit its weakest since the the post big devaluation period in August:
The monthly chart has already broken out and shows how far the currency could retrace:
For Goldman this is a key emerging markets risk, from Bloomberg:
Goldman Sachs Group Inc. on Thursday echoed the managers’ concerns, saying the biggest risk to a rebound in emerging-market assets next year is a “significant depreciation” of the yuan. Policy makers, facing a stronger dollar and slower growth, may let the currency decline, which would ripple through emerging markets, strategists led by Kamakshya Trivedi wrote.
“In our view, the fallout from such a shift is the primary risk,” the analysts said
Quite right. A falling yuan is another in the MB series of probable triggers for a deepening of the mining GFC.
