Credit rating agency Standard & Poors praises Chinese yuan devaluation
'China’s surprise move to allow for more exchange rate flexibility makes good economic sense and is not the start of a currency war or an attempt to jump-start growth,' S&P says
Credit rating agency Standard & Poor’s praised China’s devaluation of its currency on Wednesday and says the move does not threaten a currency war.
“China’s surprise move to allow for more exchange rate flexibility makes good economic sense and is not the start of a currency war or an attempt to jump-start growth,” S&P said.
On Tuesday Beijing surprised global financial markets by devaluing its currency the yuan by nearly 2 per cent against the US dollar.
A second cut on Wednesday brought reductions this week in the yuan to 3.5 per cent against the dollar to its lowest level in four years.
The move to allow more flexible trading “could help maintain the flexibilty of the country’s monetary policy as cross-border financial flows increase”, S&P said.
The shift is part of an effort to comply with conditions set by the International Monetary Fund to qualify the Chinese currency in the IMF’s “special drawing rights” basket.