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China's yuan drops for a third day


China's yuan drops for a third day


Another day and another chance for China’s central bank to lower the guiding rate for the yuan. It is the third consecutive time the bank has taken such action with its currency.

Thursday’s rate of 1 percent down against the dollar was a smaller margin than the shock cuts earlier this week and the bank announced there was no reason for it to fall further.

The weaker Yuan makes Chinese products cheaper abroad and the currency’s devaluation came in the light of figures showing exports had plunged over eight percent in July.

But has Beijing’s intervention created something of a Chinese puzzle allowing market forces to set the exchange rate but “guiding” the rate to a level to boost exports.

Officials response was to say the bank has stopped “regularly” intervening in the foreign exchange market but allowed it could conduct “effective management” of the yuan in extreme volatility.

US politicians have responded by accusing Beijing of unfairly supporting its exporters.

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