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China is Not Out of Currency Intervention Options

China is in the midst of a high-wire balancing act over the yuan.

The currency plunged against the dollar at the start of this year, fueling turmoil in markets around the world. But it has recently clawed back much of those losses, leaving investors guessing on where it’s headed next.

Despite some recent reforms, Beijing still retains significant control over trading in the yuan. But its task has become a lot trickier amid slowing economic growth and efforts to gain global acceptance of its currency. Huge sums of capital have poured out of China, and the country’s central bank has had to delve into its foreign-currency war chest to prop up the yuan.

The big fear is a sharp devaluation of the yuan that “could trigger significant financial market volatility, generating shock waves that would affect the wider global economy,” said Andrew Colquhoun, a senior director in Asia for the ratings agency Fitch.

via CNN [1]

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Alfonso Esparza

Alfonso Esparza [6]

Senior Currency Analyst at Market Pulse [7]
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza
Alfonso Esparza

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