InvestorQ : Why are world markets worried by the movements in the Chinese Yuan?
Ria Jain made post

Why are world markets worried by the movements in the Chinese Yuan?

Answer
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Sadaf Khan answered.
2 years ago


There are three key reasons for the same. Firstly, China is the world’s largest exporter and accounts for close to 14-15% of world exports. Yuan devaluation gives China a disproportionate advantage in increasing its export market share. Secondly, China is also the world’s largest importer. Commodity producers like Australia, Indonesia, Canada and Africa rely substantially on China as the world’s largest market for commodities. Yuan devaluation would make such exports to China more expensive at a time when they are already facing contraction of Chinese demand. Last, but not the least, global markets are fearing an all-out currency war with most nations like Japan, Europe and Brazil having already seen a sharp currency devaluation over the past year due to a cheap-money policy.