Experts Split on the Implications of Chinese Currency Devaluation

By Alex Yeager

In a controversial move, China unexpectedly took action in early August to devalue its currency, the Yuan.  The currency’s 3% downward adjustment was its biggest devaluation in 20 years, and helped stoke global economic slowdown concerns.  Economists have speculated that the devaluation was motivated by either anticipation of a rate hike by the United States Federal Reserve, sluggish growth indicators in Chinese GDP, or a combination of these factors.  Now nations such as India and the United States are calling for Chinese accountability for its devaluation actions, pointing to the tactic’s tendency to spark trade wars and contribution to this month’s global financial correction.  Others, however, are now lauding the move as a way to bring China closer to the free-market currency ‘float’ that experts have been pressuring the nation to move towards for years.