China, Central Bank devalued yuan to boost growth. “At the start war of currencies” – The Daily

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Central Bank of China has written down the yuan 1.9% to try to combat the economic slowdown and revive the export . Cutting the price of the currency relative to the dollar is the most robust since 1994, when the country unified official rates. The move brings the official exchange rate to its lowest for nearly three years against the greenback. According to Chinese authorities, aims to give more space to the market in determining the change taking into account supply and demand and the closing rate of the previous day. It ‘also true that the devaluation will reduce the purchasing power of Chinese consumers on some products. The decision comes after that in July, exports registered a -8.6%, while the data on GDP growth (+ 7% in the second quarter) are considered unreliable by many analysts. This despite repeated cuts in interest rates. All these factors in turn have led to a series of thuds of lists stock market, continued despite the ad hoc measures undertaken by the government.

The maxi-devaluation was decided at a time when even the currencies of Australia, South Korea and Singapore have depreciated and increases the risk of a ‘ currency war ‘ between the economies of the area. According to Stephen Roach , former president of Morgan Stanley in Asia and now associate professor at Yale, “in a weak global economy takes much more than a devaluation of 1.9% can bump up the ‘ export. This increases the possibility that the growing and destabilizing skirmishes turn into a world war of currencies “. And for Matthew Paganini , analyst at DailyFX, China “has every right within the framework of the currency war which are far only the United States and Britain, at least in an official manner.” “Unofficially we believe it can be a move not so much looking for a devaluation durable, “adds Paganini,” but to convey the message that the market that many times we have tried to convey to investors, namely that the way the yuan should not be considered only to rise “.

The move has undermined European stocks and Wall Street, despite its Tuesday Greece and creditors have reached a technical agreement for the release of the third bailout. Frankfurt was black sweater -2.45%, followed by Paris (-1.73%). Milan stock left on the ground 0.79%.

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