Home' Trinidad and Tobago Guardian : August 13th 2015 Contents It said the fluctuations would "con-
verge to a reasonably stable zone" fol-
lowing a "short period of adaptation."
Until now, Beijing set the yuan s
value each day based on a basket of
currencies that is believed to be dom-
inated by the US dollar. That meant
the yuan rose with the dollar over the
past year, hurting Chinese exporters
and raising the threat of politically
dangerous job losses. Exports in July
fell by an unexpectedly steep 8.3 per
cent from a year earlier.
The yuan, also known as the ren-
minbi, is allowed to fluctuate in a band
two per cent above or below a rate set
by the People s Bank of China based
on its currency basket.
The central bank said that starting
Tuesday, the daily target will be based
on the yuan s closing the previous day
and information from traders about
currency supply and demand.
China s economic growth has
slowed to an annual rate of just 7 per
cent, which is healthy for most coun-
tries but far below the previous
decade s double-digit pace.
China becomes the third major trad-
er to take actions that lower the value
of its currency. Initiatives by Japan
and the European Union over the past
two years depressed the yen and euro
by wider margins than this week s
decline in the yuan.
Beijing s move could complicate the
U. Federal Reserve s decision about
when to raise interest rates that have
been near zero since the 2008 global
financial crisis. The Fed was expected
to act later this year.
A weaker yuan would reduce the
price of Chinese goods, pushing down
already-low US inflation of 1.3 per
cent. The Fed wants to be "reasonably
confident" inflation is returning to its
two per cent target before raising rates.
The IMF said the latest change
would have no effect on the decision
about whether to add the yuan to the
dollar, the euro, the yen and the British
pound in the basket of currencies used
to set the value of the Fund s in-house
currency, called Special Drawing
The IMF staff recommended last
week that China wait until at least
October 2016 to join. The Fund s board
is due to consider that recommenda-
tion in October.
to five-year lows.
China is exporting "deflationary pressure," said
Morgan Stanley analysts Hans Redeker, Ian Stannard
and Sheena Shah in a report.
"This is not a marginal event, given China s eco-
nomic weight," they said.
Neighbouring Vietnam announced it was widening
the band in which its own currency, the dong, is
allowed to fluctuate each day from 1 per cent to 2
per cent. That would allow the dong to depreciate
faster, which prompted suggestions Vietnam might
be trying to help its exporters compete with Chinese
On Wednesday, the Chinese central bank indicated
it had no immediate plans to stop the yuan s decline.
Thursday, August 13, 2015 www.guardian.co.tt Guardian
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BEIJING (AP)---China s yuan fell further Wednes-
day, fueling concern about a possible "currency
war" if other governments fight back with their
own devaluations to compete in export markets.
Shock waves from Tuesday s 1.9 per cent deval-
uation against the US dollar, which was the yuan s
biggest change in a decade, spread through financial
markets, causing stocks and Asian currencies to
Beijing said the yuan s decline was a one-time
event and part of changes aimed at making the
tightly controlled currency more market-oriented.
But analysts said allowing market forces free rein
could drive the yuan sharply lower. Those suggestions
gained ammunition when the currency slid another
1.6 per cent on Wednesday.
"It is very possible that we could see a 10 to 15
per cent drop in the exchange rate against the US
dollar in the next week or two," said Duncan Innes-
Ker of The Economist Intelligence Unit in a research
Investors saw Beijing s move as an effort to benefit
its exporters but many economists rejected that view
because global demand is weak.
The yuan s decline was small compared with fluc-
tuations of freely traded currencies. But after a
decade of little or no movement, the change rattled
financial markets and threatened to fan political ten-
sions with Europe and the United States.
While the International Monetary Fund welcomed
Beijing s support for market forces, the change
sparked complaints in Washington by lawmakers
who accuse Beijing of manipulating its currency to
gain a trade advantage.
"This move may also trigger a new currency war"
if central banks respond by trying to depress their
country s own exchange rates, said Nicholas Teo of
CMC Markets in a report.
Asian currencies declined as the lower yuan
weighed on prices in markets where China is a major
trader. Malaysia s ringgit and the Indonesia rupiah
plunged to their lowest levels in 17 years. The Sin-
gapore dollar, Taiwan dollar and Philippine peso fell
China currency falls for second day
A bank clerk counts Chinese currency notes as her colleague attends a customer at a bank outlet in Huaibei in central China's Anhui
province. China's surprise move on Tuesday to devalue its currency has intensified concerns about a slowdown in the world's second-
largest economy, whose growth rate has reached a six-year low. It is also fanning tensions with the United States and Europe, whose
exports could become comparatively costlier. AP PHOTO
LONDON---The CEO of Royal Dutch
Shell says he decided to drill for oil
off the coast of Alaska after a careful
evaluation of the risks.
IBen van Beurden says that although
drilling in the Arctic carries an
"increased risk profile" because of the
fragile environment, the reservoir Shell
is exploring is "from a technical per-
spective relatively easy."
He said: "You have to make a judg-
ment, can I do this in a responsible
way? That is a bit of a personal journey
that I had to go through ....We believe
that we can responsibly explore for
hydrocarbons in Alaska."
Shell has received permission to drill
at two sites in the Chukchi Sea. Activists
including Greenpeace have protested,
arguing it s unsafe. (AP)
Shell CEO explains Arctic decision
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