SaxoTV

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

1,052 views
August 11, 2015 charts, chf, chfusd, chief economist, china, china 2014, china banks, china consumer spending, china credit bubble, china deflation, china economy, china economy growth, china equity market, china exports, china gdp, china gold, china growth, china in 2014, china manufacturing, china mobile, china outlook, china pmi, china policy, china politics, china rates, china slowdown, china stimulus, china stock market, china trade data, chinaeconomy, chinarai, chinese, chinese banks, chinese consumption, chinese economy, chinese foreign reserves, chinese gdp, chinese growth, chinese stock market, chinese stocks, chinese yuan, cny, foreign exchange, forex, forex 2014 outlook, forex buying, forex eurusd, forex exchange, forex idea, forex market, forex market overview, forex markets, forex saxo bank, forex strategy, forex trade idea, forex trading, forex trading 2014, forextrading, fx, fx crosses, fx forex, fx investing, fx market, fx markets, fx options, fx optionsf, fx optionsffx, fx spot, fx spotf, fx strategy, fx trade, fx trade idea, fx traders, fx tradersf, fx trading, fx volatility, fx volatilityf, fxmarkets, rmb, saxo tv, tradingfloor.com, xaueur, xauf, xaufx, xaufxff, xf
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."