The Fate Of Currencies by Tyler Yell
The global economy was nurtured back to health after the credit crisis by China. Now it’s time to see if the world can stand with a drop in China’s demand.
The scare of August 24, 2015 will remain on investors’ psyche for years to come. US equity futures were limit-down before market open, and currencies like the New Zealand dollar had their most aggressive moves in 30 years as liquidity vanished when it was needed most. However, many investors failed to understand and are now coming to realize that the yuan, which was devalued two weeks before the minicrash on August 24, 2015, is what could shock the world and global markets. Likewise, what happened with the Shanghai Composite Index is a small demonstration of the booms and busts that happen in any growing economy.
THE IMPACT OF THE YUAN
The yuan is critical because China is critical to global economic health. Many companies and countries depend on China’s growth and hope to see a continuation of that growth into the future to help them avoid weakening domestic demand or weakness in prior trade partners such as Latin America or Europe...