China just lowered its interest rate today and reduced the banks reserve ratio. This sends a strong signal to the market that China is determined to maintain its growth trajectory. The news of course resulted in the Shanghai futures surging even as I write, but on the other end of the spectrum we are confronted once again by a Yuan which could see its value falling vs the US$. This could spark a domino effect on all emerging markets currencies and we may yet see another fall in value of these currencies vs the US$.
Here's an interesting article in Bloomberg which is worth a read. Some researches are expecting the Yuan to fall to 7 Yuan to the US$ by year end and to 8 Yuan by the end of 2016. We can only imagine the repercussion across all emerging markets currencies.
http://www.bloomberg.com/news/articles/2015-08-25/china-agencies-said-to-assume-yuan-at-7-to-dollar-in-research-idqx3oae
No comments:
Post a Comment