China: Second devaluation of renminbi against dollar

The central bank said the devaluation was due to its official guidance rate, which was down nearly 2 per cent to 6.2298 yuan per dollar – its lowest point in almost three year.

China is the third major economy to act to lower its currency value.

The weaker yuan sent currencies of emerging markets in Asia down in particular, many of whom rely heavily on exporting to China.

China is such an incredibly important market for Apple, the biggest company in the history of capitalism. “The central bank has often talked about how it should come down, it doesn’t often talk about getting the currency higher”, he said. “Rather than changing their ways, the Chinese government seems to be doubling down”.

“Sterling fell on today’s announcement, which could be an indication that analysts feel the timing of the first rate rise is once again being pushed back”, Brettell added.

Speizer said devaluing currency was a fairly common recourse for central banks around the world to help stimulate economies.

The PBOC also cited abundant foreign exchange reserves, stable fiscal conditions and healthy financial system. The company said last month that it was expecting a strong second-half of the year in China.

The European markets ended deep in the red on Tuesday as fears of declining Chinese momentum and disappointing German economic sentiment figures overshadowed news of a technical agreement in Greece’s bailout deal. And while it’s true that the currency has depreciated this week, many analysts have praised China for following through on its commitment to allow market forces more influence over the currency. “Any reversal in reforms would be a troubling development”, the department said.

Of course, it is probably too early for a final verdict and a lot will depend on what happens next – whether this is a one-off move or the beginning of a more significant devaluation trend. Frankfurt closed 3.2 percent down, Paris 3.4 percent.

The exchange rate tumble was triggered by an attempt to bring the central parity rate closer to the market consensus.

The People’s Bank of China insists there is no ground for sustained yuan depreciation, however a second consecutive daily devaluation would suggest otherwise.

“China has manipulated its currency for a long time”. Already carrying $19 trillion in national debt, America can no longer afford to remain passive in the face of disruptive actions by other nations that further threaten our economic well-being. And so as trading began on Wednesday, the bank attempted to keep up its free-marketish signaling even as the yuan declined further, calling the volatility a “normal phenomenon” in a statement.

Brent crude was down 3 percent and U.S. crude fell 4 percent following the devaluation by the world’s top energy consumer.

“We stay underweight German autos, luxury and capital goods with high China exposure”, Credit Suisse (Other OTC: CDSSF – news) strategist Andrew Garthwaite said in a note to clients. This afforded an advantage to major competitors of the Chinese export sector, thereby crimping demand for Chinese-produced goods.

Exchange rate for U.S. dollar and Chinese yuan (CNY). “And that is a slow growth, beggar-thy-neighbor outcome that is very disruptive of global growth”. “What does this tell us about how weak their economy is?”

“If the renminbi is now on a government-induced path to weaken further, while the Fed is moving to strengthen interest rates, that divergence could be a cause for concern in the global economy as well as the bilateral relationship”.

“We just don’t know what the real motivations of the Chinese leaders are”.

The People’s Bank of China called the 1.9% cut a one-time adjustment.