YUAN DEVALUATION: What the analysts think

China’s devaluation of the yuan will support the country’s metal exports, contribute to global oversupply, and weigh on global prices, but also further internationalises the renminbi, analysts said.

The People’s Bank of China’s decision to devalue the yuan by 2% on Tuesday August 11 was met with concerns that it was a sign of a further contraction in the the country’s demand for metals.
The further devaluations that followed on Wednesday and Thursday, bringing the total cut to 4.6% over three days, heightened concerns over China’s “growth-rattled markets”, analysts at ANZ said on August 13.
But for China's metal producers, the devaluation will reduce production costs and “might mean the difference between shutting down and continuing to produce”, Macquarie analyst Matthew Turner said on August 12.

“A fall in the yuan against the dollar increases the yuan price of that metal. This should encourage Chinese producers to produce more...


Charlotte Radford

August 17, 2015

11:02 GMT