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China devalued yuan by 1.9%

Tuesday, Aug 11 2015
China allowed its yuan to fall to levels last seen in 2012, a shift that could provide a competitive boost to exports for the world's second-largest economy. Asian stocks turned mixed as investors weighed the implications of the surprise move, which seemed to end months of officially sanctioned yuan strength. China's central bank set the midpoint for its currency at 6.2298 per dollar CNY=SAEC, down from Monday's fix of 6.1162, and said it was aiming for a depreciation of 2 percent. This means devaluation of 1.9%.
 
SocGen's Albert Edwards said some five months ago: "We have long believed that China's growth and deflation problems will necessitate a devaluation of the renminbi in a strong dollar environment. There is mounting evidence that this process may already be underway as the currency falls to a 28-month low against the dollar. In the current deflationary environment the Chinese authorities simply can no longer tolerate the continued appreciation of their real exchange rate caused by the dollar link."
 
After the news Aussie was pushed sharply down against US dollar, as many other currencies as well and is currently being traded around 0.7320 area. Pair is likely to find support around 0.7250 level and resistance above 0.7370 area.
More in this category: « NAB Business Confidence falls to +4 ZEW Economic Sentiment showed mixed data »

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