Currency wars defused as renminbi rally spreads

China is helping its Asian neighbors stay out of the global currency wars.

Policymakers in the world's biggest exporter have resisted weakening the yuan as economic growth slows, seeing exchange-rate stability as key to winning global reserve-currency status from the International Monetary Fund this year. That in turn has reduced pressure on China's regional export rivals to keep their products competitive with weaker exchange rates, according to BlackRock Inc, the world's largest money manager.

"We don't expect a large depreciation of the yuan," Joel Kim, the head of Asia-Pacific fixed income at BlackRock, which oversees $4.77 trillion, said in an e-mail interview. He predicted that Asian currencies will outperform peers in other emerging markets. "If they would do something like that, for the rest of Asia and the rest of the world it would obviously set off another round of competitive devaluation."