Yuan ends session lower against United States dollars

He said the statements alleviated concerns of a currency war. On Thursday, the central bank tried to ease fears of more big declines, saying the yuan was close to “market levels”. Shares sank Wednesday, August 12, 2015, as China let its currency fall for a second day following a surprise devaluation… Even if you accept the official G.D.P. figures at face value, some of the recent growth appears to have emerged from the rapid expansion of the financial-services sector, which, as my colleague James Surowiecki wrote in June, has been caught up in a raging stock-market bubble.

ANALYST VIEW: The Chinese central bank’s “opaque communications policy may well have led to panic over-selling earlier in the week”, Angus Nicholson of IG markets said in a commentary. But the change fueled concern the yuan might fall further, giving Chinese traders a price advantage over foreign rivals and possibly igniting a “currency war” if other governments fight back by depressing their own exchange rates.

Reuters reported on Wednesday that the central bank was under pressure from factions within the government to deeply devalue the yuan in order to support struggling exporters.

Tatsuro Kanno, of Japan’s Kobe Steel, said a cheaper yuan could help China boost steel exports to Japan, posing a competitive challenge to Japanese steel mills.

Asian economies that had been fast replacing China as a low-cost producer of consumer goods, such as Vietnam, Thailand and Malaysia, could collapse.

“I think the central bankers have given people a reason to believe they’re not that anxious”, said Jason Pride, director of investment strategy at Glenmede, a money management firm. It said the fluctuations would “converge to a reasonably stable zone” following a “short period of adaptation”.

Still, the drop in the yuan – along with growing evidence that China’s economy is weakening – is shaking up global markets.

During the past year, as the dollar appreciated substantially relative to many other trading partners, a tight linkage with the yuan resulted in an unwelcome strengthening of the Chinese currency, as well. Exports in July fell by an unexpectedly steep 8.3 percent from a year earlier.

The PBOC adjusted the exchange rate formation mechanism Tuesday, which it said was designed to close the gap and better reflect market development. The currency can only trade 2 percent above or below the fixing level. Rows of new cars, lined up on vast lots for distribution across China, were reduced to blackened carcasses.

U.S. food banks are expected to give away about 4 billion pounds (1.81 billion kilograms) of food this year, more than double the amount provided a decade ago, according to Feeding America, the nation’s primary food bank network. Hong Kong’s Hang Seng climbed 0.6 percent to 24,055.03 while the Shanghai Composite Index in mainland China added 0.5 percent to 3,904.38 after briefly slipping into negative territory.

“It s hard to imagine sustainable gains given the prospect of the Fed raising rates soon”.

“Nevertheless, a more market-determined exchange rate would facilitate SDR operations in case the Renminbi were included in the currency basket going forward”, the spokesperson said. The Fund’s board is due to consider that recommendation in October.