Thursday, August 13, 2015

Why China devalued its currency, the yuan?

For the second consecutive day , Wednesday China decided to devalue its currency,  the yuan , to lower its benchmark rate on  1.62 percent , the biggest devaluation of its currency since1994 .
The  People's Bank of China  (PBOC) fixed the reference rate of its currency  to the dollar 6.3306 yuan .
According to Barclays analyst, Hamish Pepper with risky as China wants the yuan to be included in the basket of currencies of " Special Drawing Rights "of the International Monetary Fund (IMF).
China intervened in the exchange market to  prevent excessive depreciation of the Chinese currency against the dollar .
This is a major step for the yuan to be liberalised , "said Liu Dongmin, finance director of admissions at the Chinese Academy of Social Sciences.
Other experts suggest that China believes that its currency is relatively strong against other world currencies, including those of its main competitors ( the Japanese yen and South Korean won) or that of its main trading partner, the euro .

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