China’s Currency Chaos—Everything Is Connected

One thing leads to another.
China’s Currency Chaos—Everything Is Connected
A man on a street in Beijing on Nov. 12, 2015. Greg Baker/AFP/Getty Images
Valentin Schmid
Updated:

China is probably looking forward to the new year. A fresh start on Feb. 8, putting all the currency chaos behind.

This may well remain wishful thinking, as events are going from bad to worse—and Jan. 6 is no exception.

The Chinese yuan fell 0.6 percent—this is a lot for a big currency—to 6.55, the lowest level since March 2011. Traders dumped the yuan after China’s central bank fixed its value 0.22 percent lower, another official devaluation.

China first devalued the yuan in August of 2015 and then intervened with great force in the market to keep its value relatively stable, spending $255 billion of its foreign currency reserves by the end of November.

China's foreign exchange reserves as of Nov. 30, 2015. (Bloomberg)
China's foreign exchange reserves as of Nov. 30, 2015. Bloomberg
Valentin Schmid
Valentin Schmid
Author
Valentin Schmid is a former business editor for the Epoch Times. His areas of expertise include global macroeconomic trends and financial markets, China, and Bitcoin. Before joining the paper in 2012, he worked as a portfolio manager for BNP Paribas in Amsterdam, London, Paris, and Hong Kong.
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