The main world stock markets recorded falls, all driven primarily by a concern <- - cxenseparse_start>: The People’s Bank of China lowered the reference exchange rate of the yuan against the dollar, a fact that was followed by a drop in trading on the market
So, the Chinese currency fell yesterday to a minimum of four years. <- - cxenseparse_end>: 6.4510 per dollar, its lowest level since August 2011. This is a fall of 3.5 percent of its value in just two days.
Why so steep a decline in the currency? Experts agree that the leadership of the Communist Party of China seeks to revive an industry that is making losses as export. That said Giovanni Reyes , a PhD in Economics from the University of Pittsburgh and professor at the Universidad del Rosario.
“No doubt, the Chinese do not want a strong currency because so Overall this makes exports uncompetitive encarecerlas country. So that a strong currency is weak to export, and if people no longer produced internally to engage in importing, that leaves negative trade balance and affects employment “, he said.
The annual figure Chinese exports fell just 8.3 percent, which attests to the serious problem of an economy that depends heavily on the other.
“China wants to make exports more competitive, but it also requires other nations are buying. If the other poles of purchase are not so eager to consume, it also reduces the export capacity, “Reyes added.
Defend your interests
From a historical analysis, Enrique Posada , director of the Confucius Institute at the University Jorge Tadeo Lozano, said that “the Communist Party of China has always handled according to the convenience of its economics, the exchange rate. The government had revalued the currency, but now change focus and try to control their movements. “
Media and experts have speculated that the Asian giant is taking these measures to win support for the entry of yuan in the domestic currency of the International Monetary Fund, called Special Drawing Rights (SDR, for its acronym in English).
Speculation increases considering that the People’s Bank of China announced a week after reform propose that the IMF delayed until September 2016 the decision on the entry of the yuan in its domestic currency.
Indeed, the International Monetary Fund described the Chinese reform as “a good step” for the Asian giant to the region.
However, given the rapid devaluation of the currency and to international markets anticipating a worse fall, the Chinese central bank had to calm alarms being generated globally against the yuan .
“The People’s Bank is fully able to stabilize the exchange rate if need be,” he said at a press conference Ma Jun , chief economist at the bank.
“This is achieved through direct intervention in the foreign exchange market to prevent a mob mentality leads to irrational movements on the change,” he said.
The recent days sparked widespread criticism, especially from neighboring countries, which suggests that the Asian giant seeks a” currency war “in the region.
” The argument China is trying to boost growth by weakening its currency to boost exports is not convincing, “said the chief economist for Asia Pacific at the rating agency Standard & amp; . Poor’s (S & P), Paul Gruenwald , in a statement
However, scholars consulted by El Colombiano not agree with this view: “China has always sought to strengthen its economy working together with other countries, putting aside political considerations. Has always had the vocation to cooperate with all and to avoid disputes, “argued Posada.
” As Norway, China focuses on maintaining its capital market under control, and this policy works because it is being handled based on corrupt goals, but with responsibility, “said Reyes.
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