“The timing was surprising but it was coming as China was trying to internationalize the yuan.”
Beijing has once again cut the yuan to dollar guiding exchange rate. That’s after the national currency’s Tuesday plunge of almost 2 percent. Wednesday’s additional 1 percent devaluation resulted in the largest two-day lowering of the yuan in more than two decades.
The devaluation of 7 percent this week was a ‘market reaction’ in line with what the United State and the IMF had been demanding of China,” said another expert earlier in an interview with Sputnik.
The move which sent shockwaves throughout Asian and North American stock markets is aimed at making Chinese exports cheaper and thus keeping investors interested in the country’s businesses.
Talking about China’s relationship with other economies, Wan said, “The political relationship between China and Russia is getting closer and there is still enormous economic potential. We shall see more cooperation on the currency side as well.”
China’s devaluation of the yuan was dwarfed by the massive upward valuation of the trading currency over the past few years, and had to be taken to match similar reductions in the levels of other East Asian currencies.
Wan also explained that now the speculation is mostly on US side as it is expected for the Federal Reserve to raise interest rates in September and now there is really pressure on that decision.