China Allows Yuan to Depreciate to Boost Exports and Manufacturing
• Yuan is sliding; markets believe China is engineering a light depreciation to support loose monetary policy and exports • Yuan has become less competitive as currencies of trading partners like Japan, South Korea, and Taiwan drop more sharply • PBOC appears to have loosened its grip on yuan, allowing it to fall below 7.2 per dollar level it previously defended • Weak yuan would help China's struggling manufacturing sector and lift export earnings • Analysts expect managed, orderly yuan depreciation ahead, not a fully free float; possibly towards 7.4 level