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Maiyegun General

Thursday, 13 August 2015

Economy: Here’s What China’s Currency Devaluation Really Means

Everything you need to know in 1 graphic

In a surprise move, China announced this week devalued its currency, the yuan, relative to the dollar.

The move, done by adding supply of yuan to the global marketplace, is a step towards giving market forces more influence over China’s tightly-controlled currency. It will help Chinese businesses who do business in foreign countries like the United States by making their goods less expensive here. And a more free-floating yuan is also more likely to gain the elite status of global reserve currency, a goal Beijing badly wants to achieve.

But it’s unclear exactly how much control China is willing to cede over its currency. That uncertainty is taking a toll on global stock markets this week, with the Dow Jones Industrial Average dropping more than 200 points Tuesday before partially recovering Wednesday.

For more on China’s currency devaluation and what it means, see TIME’s infographic below:

TIME

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