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Derechos | Equipo Nizkor
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Derechos | Equipo Nizkor
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12Aug15
China lets yuan fall further, fuels fears of currency war
China's yuan hit a four-year low on Wednesday, falling for a second day after authorities devalued it, and sources said clamor in government circles to help struggling exporters would put pressure on the central bank to let it fall lower still.
Spot yuan in China dropped to as low as 6.4510 per dollar, its weakest since August 2011, after the central bank set its daily midpoint reference at 6.3306, even weaker than Tuesday's devaluation.
The currency fared worse in international trade, touching 6.59.
The central bank, which had described the devaluation as a one-off step to make the yuan CNY=CFXS more responsive to market forces, sought to reassure financial markets on Wednesday that it was not embarking on a steady depreciation.
The devaluation had sparked fears of a global currency war and accusations that Beijing was unfairly supporting its exporters.
"Looking at the international and domestic economic situation, currently there is no basis for a sustained depreciation trend for the yuan," the People's Bank of China (PBOC) said.
Foreign exchange traders later said state-owned banks were selling dollars on behalf of the PBOC, and the spot market ended at 6.3870, after rallying strongly towards the close, which will influence Thursday's midpoint.
"Apparently, the central bank does not want the yuan to run out of control," said a trader at a European bank in Shanghai.
A trader at another European bank said the unexpected devaluation had caused "some panic" in markets.
Analysts at BMI downgraded their year-end forecasts for the currency to 6.83, down 10 percent from pre-devaluation levels.
The yuan has lost 3.5 percent in China in the last two days, and around 4.8 percent in global markets.
Its slide pulled down other Asian currencies on Wednesday, with Indonesia's rupiah IDR=ID and Malaysia's ringgit MYR= hitting 17-year lows, and the Australian AUD=D4 and New Zealand dollars NZD=D4 touching six-year lows.
Indonesia's central bank pinned the rupiah's fall directly on the yuan devaluation and said it would step into the foreign exchange and bond markets to curb volatility.
Poor Economic Data
Tuesday's devaluation, the biggest one-day fall since 1994, followed a run of poor economic data and raised market suspicions that China was embarking on a longer-term slide in the exchange rate that would make Chinese exports cheaper.
Last weekend, data showed an 8.3 percent drop in exports in July and that producer prices were well into their fourth year of deflation.
Its slide pulled down other Asian currencies on Wednesday, with Indonesia's rupiah IDR=ID and Malaysia's ringgit MYR= hitting 17-year lows, and the Australian AUD=D4 and New Zealand dollars NZD=D4 touching six-year lows.
Indonesia's central bank pinned the rupiah's fall directly on the yuan devaluation and said it would step into the foreign exchange and bond markets to curb volatility.
Poor Economic Data
Tuesday's devaluation, the biggest one-day fall since 1994, followed a run of poor economic data and raised market suspicions that China was embarking on a longer-term slide in the exchange rate that would make Chinese exports cheaper.
Last weekend, data showed an 8.3 percent drop in exports in July and that producer prices were well into their fourth year of deflation.
[Source: By Pete Sweeney and Lu Jianxin, Reuters, Shanghai, 12Aug15]
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 | This document has been published on 14Aug15 by the Equipo Nizkor and Derechos Human Rights. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. |