| The Chinese yuan hit a four-year low last week against the U.S. dollar, stoking concerns that a devaluation could add to global deflationary pressures. With emerging-market growth rates and commodity price levels falling precipitously, China’s exchange-rate plans are quickly becoming a main source of uncertainty.
Since the People’s Bank of China on Aug. 11 adjusted the mechanism for setting the daily fixing rate and the value of the yuan fell by 1.9% against the dollar, markets have anticipated additional depreciation. This expectation could easily become self-fulfilling, which has forced China’s central bank to aggressively sell foreign reserves in order to prevent such an outcome...............................................Full Article: Source
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