FXStreet (Delhi) – Jane Foley, Research Analyst at Rabobank, notes that the China’s recent currency devaluation has received broad approval from G-20 countries as they managed to convince that the evaluation was done to embrace a more marker determined exchange rate.
Key Quotes
“Chinese stock markets reopened after a four day weekend to further volatility this morning. The Shanghai Composite initially rallied as much as 1.8% following remarks from PBoC Governor Zhou Xiaochuan that the rout in equity markets was close to ending and that state intervention prevented systemic risk and stopped a free fall. However, the selling pressure re-emerged later in the session with the news that Chinese 2014 growth has been revised down to 7.3% from 7.4% stirring the market’s anxiety.”
“Beijing’s recent currency devaluation received broad approval from European policy makers at the G20 meetings over the weekend. Chinese authorities appear to have convinced many leading finance ministers and central bankers that the move was in line with the country’s aim to embrace a more market determined exchange rate.”
“IMF Chief Lagarde said it was “extremely comforting to have that level of understanding” of Chinese policy.”
“US support for Chinese policies was more measured. Treasury Secretary Lew looked for reassurances from China that it would allow market pressures to push the CNY up as well as down while Japanese Finance Minister Aso criticised Chinese representations for an incomplete explanation of the motives behind recent policy changes. That said, the BoJ has confirmed that the PBoC, BoK and BoJ met to exchange views on the sidelines of the G20 meeting. This could be a signal that the region’s largest economies are keen to avoid being drawn into a currency war.”
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