On August 12, the People’s Bank of China (PBOC) announced a further devaluation of the Chinese currency by 1.6 percent to RMB 6.3306 against the US dollar, compared to the official rate of RMB 6.2298 on August 11, in line with the PBOC’s target of rectifying the strength of the RMB. The move has come as a further surprise to the currency markets following the unexpected devaluation of the Chinese currency by 1.9 percent against the US dollar on August 11. With the latest devaluation, on August 12 the Chinese currency has been devalued to RMB 6.9481 against the euro, RMB 9.8499 against the British pound, RMB 4.6225 against the Australian dollar, and RMB 4.8355 against the Canadian dollar, compared respectively to RMB 6.7633, RMB 9.5723, RMB 4.5545 and RMB 4.7922 on August 11.
The adjustments of the value of the RMB are expected to provide a boost for sales of Chinese goods in foreign markets. Meanwhile, following the devaluations, international stock, currency and commodity markets have come under pressure amid fears of a currency war which could negatively impact the global economy.