China’s Stealth Devaluation Continues Despite Lew Blasting “Unacceptable” FX Practices


The US Dollar has traded within a relatively “stable” band against the offshore Yuan for much of the last six weeks…

But when compared to the collapse of the Yuan “basket” – as PBOC devalued against the rest of the major trading partners – the ‘stealth’ devaluation is obvious…

As Lew’s statement notes,

Competitive devaluation represents a beggar-thy-neighbor fight for a shrinking global pie, not a pathway to stronger global growth.

Strong multilateral institutions such as the IMF and the G-20 are important vehicles for reinforcing norms against predatory currency practices and for mobilizing multilateral pressure against countries that engage in them. At the G-20 meeting in Shanghai this February, members not only committed to using all tools of policy—monetary, fiscal, and structural—to boost economic growth in a time of weak demand. They also committed to refrain from competitive devaluation and, for the first time, to consult on foreign exchange markets to avoid surprises that could threaten global financial stability.

So the question is – Is it ok to “devalue” your currency against other non-reserve-status currencies? As long as the veil of “stability” is maintained against The USD?

Full article: China’s Stealth Devaluation Continues Despite Lew Blasting “Unacceptable” FX Practices (Zero Hedge)

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