Devalues -- The Telegraph
China has begun to devalue the yuan for the first time in over a decade, raising fears that it will set off a 1930s-style race to the bottom and tip the global economy into an even deeper slump.
The central bank has shifted the central peg of its dollar band twice this week in a calculated move that suggests Beijing aims to offset the precipitous slide in Chinese manufacturing by trying to gain further export share abroad.
The futures markets are pricing in a 6pc devaluation over the next year. "This is clearly a big shift in policy and we are now on alert," said Simon Derrick, currency chief at the Bank of New York Mellon.
The move follows a Politburo speech by President Hu Jintao warning that China is "losing competitive edge in the world market".
China has begun to devalue the yuan for the first time in over a decade, raising fears that it will set off a 1930s-style race to the bottom and tip the global economy into an even deeper slump.
The central bank has shifted the central peg of its dollar band twice this week in a calculated move that suggests Beijing aims to offset the precipitous slide in Chinese manufacturing by trying to gain further export share abroad.
The futures markets are pricing in a 6pc devaluation over the next year. "This is clearly a big shift in policy and we are now on alert," said Simon Derrick, currency chief at the Bank of New York Mellon.
The move follows a Politburo speech by President Hu Jintao warning that China is "losing competitive edge in the world market".
The central bank has shifted the central peg of its dollar band twice this week in a calculated move that suggests Beijing aims to offset the precipitous slide in Chinese manufacturing by trying to gain further export share abroad.
The futures markets are pricing in a 6pc devaluation over the next year. "This is clearly a big shift in policy and we are now on alert," said Simon Derrick, currency chief at the Bank of New York Mellon.
The move follows a Politburo speech by President Hu Jintao warning that China is "losing competitive edge in the world market".
Read more ....
My Comment: I miss this story last week, and now I know why U.S. Treasury Secretary Paulson was in China last week. This news is big, and it will affect every manufacturing nation in the world. This is also a signal to me that world protectionism is just around the corner.
The futures markets are pricing in a 6pc devaluation over the next year. "This is clearly a big shift in policy and we are now on alert," said Simon Derrick, currency chief at the Bank of New York Mellon.
The move follows a Politburo speech by President Hu Jintao warning that China is "losing competitive edge in the world market".
Read more ....
My Comment: I miss this story last week, and now I know why U.S. Treasury Secretary Paulson was in China last week. This news is big, and it will affect every manufacturing nation in the world. This is also a signal to me that world protectionism is just around the corner.