In a new report, Deutsche Bank analyst Alan Ruskin discussed the growing number of ways that the current forex environment resembles that of the late 1990s. Ruskin made nine observations about the currency world and China’s recent devaluation of the renminbi (RMB).

1. Pegged Currency Regimes

The move is yet another indicator that pegged currency regimes are vulnerable, which comes during a period in which USD pegs are exposed to a FOMC tightening cycle.

2. Carry Trades

The decision demonstrates that carry trades, which are typical of forex peg regimes, produce larger, more volatile “busts” when the peg is eliminated.

3. Eliminating Pegs

The presumption that the elimination of a peg will simply lead to a direct movement to equilibrium price is misguided, and Ruskin believes a RMB overshoot is to be expected before equilibrium is eventually reached.

4. Hard Landing For The RMB

Ruskin expects…

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