China’s campaign to stabilise yuan comes at a cost

October 9, 2015

After the shock of August’s mini-devaluation, some calm has returned to the currency. Yet restoring stability required hefty central bank intervention and a crackdown on capital outflows. China is still a long way from letting its exchange rate be set by market forces.

G20′s promise to avoid currency wars is feeble

September 7, 2015

Finance ministers and central bankers from large countries did not ask the United States to delay raising interest rates. They have no other plan to stop capital fleeing China and other emerging economies. That makes their pledge to resist “competitive devaluations” ring hollow.

Impossible trinity gives China a difficult choice

August 26, 2015

Not even the People’s Republic can go on cutting interest rates, keep the yuan stable, and allow capital to flow freely. It must choose two out of three. Huge foreign exchange reserves give Beijing some room to muddle through, but not enough to reverse self-fulfilling outflows.

Edward Chancellor: The cost of China’s devaluation

By Edward Chancellor
August 17, 2015

Forget about currency wars and global deflation. The true impact of the yuan’s sudden decline will be felt by China’s dysfunctional credit system, where domestic borrowers and foreign lenders believed the currency could only appreciate.

China’s currency could fall another 5 percent

August 13, 2015

The central bank says it’s not out to weaken the yuan. But to recoup China’s competitiveness without slipping into deflation, a slide to at least 6.75 to the dollar would be welcome. That could help the mainland, but would give the rest of the world a new headache.

China’s yuan devaluation push looks far from done

August 12, 2015

The central bank weakened the official exchange rate by another 1.6 pct against the U.S. dollar. It’s a clear sign the new “market-oriented” yuan is heading down. Until China uses its foreign exchange hoard to prop up the currency, investors will assume there’s further to go.

Yuan devaluation raises currency war anxiety

August 11, 2015

China’s central bank weakened its currency by almost 2 pct against the U.S. dollar in what it called a “one-time correction.” A deflating mainland economy may justify further depreciation. That would put pressure on other countries, raising the risk of tit-for-tat moves.

China fatigued by debt as flexible yuan turns 10

July 21, 2015

The world’s economic growth engine abandoned the dollar peg a decade ago. Beijing may have given up on a cheap yuan, but its pro-market resolve is in doubt. And while the People’s Republic’s debt-creating trade surplus has shrunk, domestic leverage is rising at a worrying pace.

Fed policy creates crunch moment for Chinese yuan

August 11, 2011

China’s suppression of its currency creates more problems than benefits. The U.S. Federal Reserve’s pledge to keep rates near zero for the next two years provides the perfect reason to do something about it. The yuan’s rise in the last three days sets the right tone.

Wen paves way for yuan depreciation

November 21, 2011

China’s premier said the currency should be more flexible “in either direction”. The idea of devaluation might sound strange, but the Chinese trade surplus is shrinking and inflation is cutting into the yuan’s real value. This could be a good time to let the market decide.