Concerned about economic growth and in effort to bring the yuan more in line with market movements, the People’s Bank of China has devalued the yuan.
Over the course of the last few years, the Chinese yuan has been moving higher, gaining in global importance and speculating that at some point the yuan (also called the renminbi) might even overtake the US dollar as the world currency of choice.
Earlier, though, officials with the People’s Bank of China devalued the yuan, explaining that the goal is to bring the currency more in line with market movements. The yuan is tightly controlled by the Chinese government, usually based on the performance of the US dollar.
China’s economic growth has been slowing, and this is a move that could help the country pick up the pace a little bit. Exports have been plunging, and Chinese officials hope that the devaluation will boost the desirability of Chinese exports and help the economy.
Officials have taken longer than expected to make this move, in part because China has been trying to convince the IMF to declare the yuan an official reserve currency, which would recognize it in the same way as the dollar, euro and other major currencies. However, until the yuan floats freely, it will be hard to convince the IMF to make that declaration.
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