Interesting correlation between Global FX reserves and Global equities.
When countries burn up their FX reserves, it means they are in trouble. They are defending themselves against currency outflows. In the case of China it means they are liquidating their U.S. dollar reserves, this equals to a reverse QE. A reverse QE leads to a decrease in global liquidity.
When countries burn up their FX reserves, it means they are in trouble. They are defending themselves against currency outflows. In the case of China it means they are liquidating their U.S. dollar reserves, this equals to a reverse QE. A reverse QE leads to a decrease in global liquidity.
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