China's Yuan Devaluation, could hurt global market?
The above graph is line chart of USD/CNY from March 2015 to till now.
Chinas central bank allowed to deprecate their currency, causing its biggest single day loss in two decades, as the worlds second-largest economy continues to sputter. Chinese yuan depreciated around 2 percent against the U.S dollar to levels, lowest levels in last three year due to poor economic data, sending a shock through currency markets. They changed the valuation method and now taking the midpoint from market-makers quotes and the previous day\\`s closing price. The PBOC set Tuesday\\`s midpoint at 6.2298 per U.S. dollar, weakest in almost three year.
China central bank said that they want to bring the Yuan more in line with the market. Overall, Chinas important export sector has weakened during the last month and economic growth also looking weak. According to government data, July exports fell 8.3% compared with a year ago. As of now, weaker currency helps their exporters sell their goods foreign. However, this move would put pressure on other central banks around the world to push down their own currencies to help their own exporters and to prevent destabilizing capital flows and it could further hurt commodities markets because it signals sluggish demand from China.