China could deliberately engineer a much larger depreciation of the yuan if its policymakers wanted to offset the damage from tariffs to export competitiveness," the PNC economists wrote. "While unlikely, the tail risk of a Chinese devaluation would be very bad news to the global economy if realized."
In the past five years, the two biggest monthly drops in the Standard & Poor's 500 Index of U.S. stocks have been triggered by just such fears. In August 2015, China made a sudden change to its exchange-rate-management policy, sending U.S. stocks down 6.3%. And in January 2016, as China showed signs of slowing economic growth and troubles managing a burgeoning debt load, investor fears of a further devaluation led to a 5.1% plunge in the U.S. stock index.
Submitted June 27, 2018 at 02:52AM by MyEvilClone https://ift.tt/2ItJUsQ
