Swiss Economicblogs.org
For the three months leading into August, the Chinese government had kept the yuan-dollar exchange rate fixed in a tight range around 6.115 yuan to the dollar. Yet the yuan’s spot price consistently traded about 1.4 percent weaker than the fix. Investors, in other words, sensed a devaluation coming. In mid-August, Chinese officials proved them right by intervening in currency markets for three days in a row, prompting a 3 percent drop in the value of the yuan. An 8 percent decline in...
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