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How The Chinese Devaluation Is Affecting Other Currencies

This article was originally published here, on InvestDiva.com

China Town, uh, I mean Chinese government decided to devalue its currency massively against the US dollar yesterday. With that, despite the initial gains, the USD/JPY among other major pairs erased all the up-moves today. Is that it for US dollar strength?

Economic Points

Why US Dollar Fell Today?

The dollar fell 0.6 percent against major currencies on Wednesday, coming under pressure as Treasury yields dropped on doubts over whether the U.S Federal Reserve will raise interest rates in the wake of China's devaluation of the yuan.

For newbies lemme explain that China’s currency is officially called the renminbi. The yuan is the unit of account. If the RMB is traded onshore (in mainland China), it is referred to as CNY, whereas if the RMB is traded offshore (mainly in Hong Kong) it trades at the rate of USD/CNH, deliverable RMB located in Hong Kong. Thus, while the RMB is just one currency, it trades at two different exchange rates, depending on where it is traded.

How CNH Devaluation Affected Other Currencies

The yuan extended its losses, dragging the growth-linked Australian and New Zealand...


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