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Yuan just self-correcting

( China Daily ) Updated: 2016-11-18 08:04:35

The central parity rate of the yuan dropped 97 basis points to 6.8592 against the US dollar on Wednesday, the lowest since Aug 19, 2008.

Unlike in the past, in the latest round of yuan depreciation there has been no sign of China's central bank intervening to prop up the yuan.

Donald Trump's win in the US presidential election has been the direct cause of the recent weakness of the yuan. Like Britain's divorce from the European Union, it is a "black swan" event whose impact is yet to unfold. Trump becoming the next US president has increased the pressure on the yuan as a result of increased expectations that the US will raise its interest rates. The possible implementation of Trump's advocated fiscal expansionist measures as a way of stimulating the economy may also push the dollar to be stronger and thus increase depreciation pressures on the yuan.

Yuan just self-correcting

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