Once China published CFETS RMB Index, it becomes clear why they have to devalue Renminbi. 12 currencies named in the index have been devaluing since 2011.
PBOC’s Yuan devaluation is 2 years late. Despite big hooha, PBOC has maintained a very stable exchange rate with the greenback. Biggest culprit is Japan.
PBOC weakens Yuan by adjusting it’s USD-fix, day 2. Look at 2 charts of USDCNH showing aftermath of this move as well as exchange rates published by BOC.
Headlines and chart of USDCNH following PBOC’s move to devalue Yuan by moving it’s daily fix by 1.9%. PBOC is selling this move as a one-time move only.
A currency war aka competitive devaluation is being fought now between nations. With USDJPY, Abenomics thwarts US Dollar by cheapening Yen.