By Rodger Baker

Last week was an eventful one for China. First, the People’s Bank of China shocked the financial world when it cut the yuan’s reference rate against the U.S. dollar by nearly 2 percent, leading to a greater than 2 percent drop in the value of the yuan in offshore trading. The decline triggered a frenzy of speculation, including some expectations that the Chinese move would trigger a race to the bottom for Asian currencies. Beijing said the adjustment was designed to fix distortions between the trading rate of the yuan and the rate it should have been at according to speculation, and that subsequent large shifts were unlikely. The International Monetary Fund, however, noted that the move could lead to a freer floating yuan — something the IMF has asked of Beijing before the organization considers including the yuan in its Special Drawing Rights basket of currencies. In comments made on the sidelines of its annual report on the Chinese economy, released later in the week, the IMF also noted that the yuan was not undervalued, despite the decline. Tiếp tục đọc “China’s Crisis: The Price of Change” →