China adjusts: The World in Red

Today Tuesday China made their currency weaker for the first time (!) since the new system was introduced in 2005. The main change is the reference midpoint for Chinese Yuan towards US dollar with a 2% bilateral movement. Today the Yuan become 1.9% weaker when the midpoint were moved from 6,1162 for a US dollar to 6,2298. This is equal to a devaluation of Yuan counting 132.000.000 US dollar from the Chinese central bank; the reserve did fell from 33.837.000.000 US dollar to 33.705.000.000 US dollar.

 

The Chinese central bank also decided to that the daily midpoint should follow the last days ending. The central bank should have no influence in this, and what happened was only an exception; indicating another step toward liberalism.

The result of this is that the exportation from China became even cheaper and import to China became more expensive. The last is the real problem. It is more expensive to import aluminum and other to China.

For more information read the following two articles:


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