Photo: REUTERS 2015
The People’s Bank of China on Thursday, August 13 lowered the rate of the yuan to the US dollar by another 1.12% to 6.40 yuan for dollars. This is the minimum level since July 2011, says International Business Times. At the same time the exchange rate of the yuan has fallen to four-year low the day before, reports Reuters. The regulator started to devalue the national currency on Tuesday, August 11 and 12 rate was lowered by 1.86% and 1.62%, respectively.
As the South China Morning Post, some experts believe that the devaluation of the yuan is part of policy, which is aimed at a free circulation of RMB in the international market. “Take the measure represents a significant step in the reform of the RMB exchange rate and paving the way for its inclusion in the basket of Special Drawing Rights of the International Monetary Fund,” – said in a conversation with the newspaper’s chief economist Hong Liang China International Capital Corporation.
Other experts believe that China is committed towards “otvyazki” the national currency from the dollar. At the same time, as noted by Paul Makel, head of Asian currency research at HSBC, the volatility of the yuan, “has led to a weakening of other Asian currencies against the dollar and increased concerns about the beginning of a regional currency war».
The devaluation Chinese yuan by 1.9% on Tuesday led to a drop in stocks and emerging market currencies. The index of developing countries MSIC Emerging Markets on the day decreased by 1.1%, to 878.27 points. Index Bloomberg, tracks the 20 most traded currencies emerging markets, on the basis of lost 0.7%, having fallen to a record low. The largest decline, 1.6%, showed the Singapore dollar.
As explained Bloomberg, Asian currencies are falling because of concerns that a weaker yuan would force other countries in the region are also reducing rates of their national currencies to compete depreciating Chinese imports.
On Tuesday, the People’s Bank of China announced the devaluation of the yuan. This was preceded by the publication of data on the fall in exports. Reference rate was reduced by a record 1.9%, triggering the sharpest drop in the yuan since January 1994. On Wednesday, the Chinese Central Bank has continued to devalue the currency by reducing its rate by another 1.6% to 6.42 yuan per US $ .
The actions led to the collapse of the regulator to six-year low in prices for aluminum and copper. The devaluation of the yuan adversely affected the price of oil: for futures contracts for Brent fell by almost 2.5%.
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