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Impact of China Yuan Devaluation

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Last night, the USD “broke out” to the upside against the Chinese Yuan.

Of course, since the Yuan is a centrally controlled currency by the Chinese Government, the sudden, violent up-move of the USD vs. the Yuan was orchestrated by the Chinese central planners, who devalued the Yuan versus the USD.

In effect, China has joined the growing legion of currency “depreciators” like Japan, Europe, Australia, Canada, Russia, who have sought to remedy their economic woes by resorting to a lower currency– to move the competitiveness needle ever so slightly in their particular direction.

Welcome to the next phase of “the global currency war” for market share.

Of course, the USD is the biggest loser in this war if its value continues to strengthen, which means many U.S. corporations who depend on overseas trade for a chunk of their revenues, will confront increasingly stiff headwinds.

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