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China Devalues Its Currency to Three-Year Low, US Dollar Rises

In a surprise move Tuesday, China let its currency, the renminbi (RMB), fall to three-year lows, further feeding fears for China’s already slowing economic growth and stirring concern for other global markets and worries of possible currency wars.

The People’s Bank of China (PBC) devalued the renminbi, or yuan, nearly two percent against the US dollar, calling the move a “one-time correction.” Some economists felt the move was meant to give China’s exporters a break by making their goods cheaper on the world market, but others indicated a different motivation: Because the Asian powerhouse’s currency maintains a close relationship to the US dollar, when the dollar jumps against world currencies, the yuan rises against China’s trading partners’ currencies too.

Read more at Sourcing Journal.