China Devalues Currency

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Suspicions raised that Beijing is pursuing a currency war to make its exports cheaper.

From YAHOO NEWS:  Shanghai (AFP) – China’s central bank on Monday fixed its rate for the yuan currency at a four-week low, data showed, despite comments by chief Zhou Xiaochuan that there was no basis for further depreciation.

The People’s Bank of China (PBoC) set the yuan at 6.5452 to $1.0, down 0.17 percent from Friday, according to the China Foreign Exchange Trade System. The fix was the weakest since February 3, previous figures showed.

The weaker currency hurt sentiment on the stock market, with the benchmark Shanghai Composite Index closing down nearly three percent on Monday after dropping as much as 4.63 percent.

The yuan was quoted at 6.5472 to $1.0 at 4:30 pm (0830 GMT) on Monday, slightly weaker from Friday’s close of 6.5372.

But a shock currency devaluation in August, which saw the normally stable unit guided down nearly five percent in a week followed by another drop in January, raised suspicions Beijing is pursuing a currency war to make its exports cheaper.

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