The Chinese government has been tightening its control over nearly every aspect of the country’s economy. But the falling value of the Chinese currency in recent months has, for the most part, been an exception. Since April, the yuan has dropped nearly 10 percent against the U.S. dollar, including 3.5 percent since the first round of the Trump administration’s tax on imports kicked in on July 6, to as high as 6.85 against the dollar last Monday. This is important in part because it takes some of the oomph out of the U.S. trade war, as a weakened yuan will offset the effects of tariffs on Chinese exports somewhat. Moreover, it will likely strain ties even further with the White House. In a tweet on July 20, for example, U.S. President Donald Trump lashed out at Beijing, dusting off his oft-repeated accusation that the People’s Bank of China is intentionally weakening the yuan to undercut U.S. manufacturing. And whether or not China is intentionally suppressing the yuan, an even st
The Risks and Rewards in the Chinese Yuan’s Fall
Despite speculation to the contrary, it’s unlikely the central bank is intentionally devaluing the currency.