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Hardy: China devalues currency - why this matters for the Fed

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After disappointing trade figures and under some pressure, notably from the US,  the Chinese government has decided to devalue the Yuan by almost 2%. 
Saxo Bank's Head of FX Strategy John Hardy gives us his update and explains why this is such an important move for global markets. 

The devaluation opens the door just a little more on foreign investment in China and is another step towards the Chinese RMB being including in the IMF basket of Special Drawing Rights currencies. Beijing has been lobbying hard to have the CNY included for the first time as part of its push for greater internationalisation of the one party state's currency.  

The People's Bank of China's move has the potential to influence central bank policy in the west: "If China continues to devalue its currency in an effort to reflate its economy (it’s hard to believe that we won’t continue to see China letting the air out of the yuan for some time), it will export a new wave of deflation around the world and could certainly affect central bank policy globally, including for the Fed if this move begins to show up inflation measures."