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Should China Simply Devalue?

May 11th, 2016 · No Comments

  • The slowdown in China is the single biggest factor in producing a world slowdown and market mayhem.
  • Large capital flight out of China puts the Chinese central bank in a bind, with their policy options severely restricted as long as they defend the exchange rate.
  • It’s perhaps better to bite the bullet and accompany a devaluation with decisive measures to cut excesses in capacity and bad debts, boosting confidence.
  • Get this out of the way and world financial markets might regain its footing, despite the initial deflationary impact.
  • Considering the speed of Chinese forex depletion, China might very well have little alternative anyway.

Should China Simply Devalue? | Seeking Alpha

Tags: China · currencies