China Allows Yuan to Slowly Depreciate to Boost Exports
• China's yuan is sliding and markets believe authorities are slowly engineering a light depreciation to support exports and complement easy monetary policy.
• The People's Bank of China (PBOC) appears to have loosened its grip on the yuan, allowing it to fall below 7.2 per dollar.
• A weak yuan would help China's struggling manufacturing sector and lift export earnings.
• Analysts expect the yuan to continue weakening in a managed, orderly way, possibly heading towards 7.4 per dollar.
• The yuan is increasingly used in 'carry trades' to earn higher returns, but the PBOC may dampen volatility.