China devalues yuan currency to three-year low

From the perspective of International Monetary Fund requirements, “the yuan exchange rate will be more market-oriented going forward, and the volatility of both the onshore and offshore rates will pick up significantly”.

The French tyremaker’s U.S brand BFGoodrich said it was recalling approximately 129,000 tyres sold in the U.S., Canada and Mexico, mainly for use on commercial vehicles.

China weakened the yuan’s daily reference rate by a record 1.9 per cent, allowing depreciation to combat a slump in exports. This is different from other major currencies such as the U.S. dollar and the euro, which are freely traded. “Traders are looking for U.S. dollar strength across the Asia region and pressure on all local currencies”, he said. The move will likely have a ripple effect through financial markets as well as in politics, as China is the world’s largest trader and the yuan is increasingly used overseas. To stem to the rise of “FX outflows” and “cap USD/CNY drain liquidity”, the People’s Bank of China may cut banks’ reserve ratios to ease liquidity conditions.

The bank said starting Tuesday that in addition to the previous day’s exchange rate, the daily fixing of the trading band will take into account supply and demand.

Last year alone, Chinese authorities seized at least 532 million yuan (US$85.6 million) worth of fake bills, up 25 percent from the previous year, the official Xinhua News Agency reported, citing data from the Ministry of Public Security.

The central bank also said it would seek to prevent what it described as “abnormal” cross-border capital flows. But the central bank said its goal was to give market forces a bigger role, a step Washington has demanded for years.

The United States and other governments complained for years that Beijing suppressed the yuan’s exchange rate, giving its exporters an unfair price advantage and hurting foreign competitors.

This implies, in turn, that should the Chinese be turning into major sellers of the dollar and Treasuries that, all else being equal, credit, for everything from trade to investment to consumption, will become more expensive.

Mitsubishi Materials Corp. and Sumitomo Metal Mining also climbed 2.8 and 4.3 percent, respectively, on the back of a rebound in commodity prices.

It was confusing to many as to why China had wanted to be a part of the IMF’s SDR program in the first place, especially when they had just opened their Asian Infrastructure and Investment Bank (AIIB) which happens to mirror exactly the long-standing functions of the International Monetary Fund.