ROSENBERG: 5 reasons why the markets don’t like China right now

The Aussie usd designed a new 6-year low early today of 0.7216 resistant to the American dollar later on Chinese unit of currency setting up saw origins allow yesterday’s one.85percent devaluation to actually be followed along with another one-.6 percent maneuver now.

Until Tuesday, China had kept the yuan little changed against the dollar, effectively pushing it higher against other emerging-market currencies and hurting its exporters. “Weak export data may have played a part but if they honestly were trying to depreciate the yuan, they could have done so in a much more quiet manner than this high-profile way”. China, however, has always played by their own rules, thumbing their noses at western capital markets. If that means letting the market have its way, well and good.

“The central bank, if necessary, is fully capable of stabilizing the exchange rate through direct intervention in the foreign exchange market to avoid herd mentality resulting in irrational movements of the rate“, economist Massachusetts Jun with the People’s Bank of China told reporters. “They’re just destroying us”, the billionaire businessman said. The Standard & Poor’s 500 index fell 28.6 points, about 1.3 percent, to 2,055.5. “For an economy that remains predominantly export-driven, a weaker currency goes directly to the problem”.

“If the Communist Chinese devalue the yuan against a dollar that is appreciating against gold, has the yuan gone up or down?

However, Kim said the Kospi is not likely to drop any lower than 1,950 in the near future.

Until now, Beijing set the yuan’s value each day based on a basket of currencies that is believed to be dominated by the US dollar. With Euorpe, Asia and, to some extent, Africa being highly price-sensitive markets for Indian exports, it is to these markets that the exporters are anxious about losing their edge.

At the weekend, China posted a shock 8.3 per cent slump in July exports.

“If and when the velocity of the yuan’s fall significantly outpaces that of the won, its repercussions on local exporters and the overall economy could become overwhelming”, Seo said.

A man inside the Indonesia stock exchange watches the exchange board as stocks and bonds drop in Indonesia following the devaluation of China’s Yuan on August. 12.

The further problem is the collateral damage to currencies like the Vietnamese dong and others will be/is devastating and it will weaken all the East Asian currencies.

Mizuho Bank described Tuesday’s devaluation as the “start of an engineered depreciation”.

“China is a huge wild card both in terms of the rate at which it’s slowing but also how the leadership is handling it”, said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama. Most economists expect the Fed to raise the short-term rate it controls – stuck near zero since 2008 – at its September meeting. It ended up 1.5 percent at $115.24 and was the biggest positive factor for all three major indexes. The Fed wants to be “reasonably confident” inflation is returning to its 2 percent target before raising rates.

The International Monetary Fund staff recommended last week that China wait until at least October 2016 to join.

The devaluation won’t “have a material impact on the company’s financial performance”, GM said in a statement, noting that it builds cars in China so its costs will remain alrgely unchanged by the devaluation. If you think we are not in the midst of a currency war, you don’t understand fiat currency.