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                     China Devalues Currency For Third Day

   by VOA News

   China has allowed the value of its yuan currency to weaken against the
   dollar for a third consecutive day.

   The central bank on Thursday set the yuan's daily reference point just
   over 1 percent lower from the previous day, at about 6.40 per dollar.

   Beijing strictly controls the yuan, allowing it to trade within a range
   of 2 percent above or below the reference point, which it sets daily.

   So far, the currency has lost around four percent since the initial
   change in the market midpoint.

   The bank this week said the "one-time" correction was meant to give the
   market a greater role in determining the value of the yuan.

   But many investors are worried the intervention signals growth in the
   world's second-largest economy is slowing more than originally thought.

   There are also concerns it could prompt other nations to devalue their
   currency, since a weaker yuan makes Chinese exports more competitive
   for foreign buyers.

   Vietnam on Wednesday did just that. Under the new rules, Vietnam's
   currency, the dong, can be traded within two percent above or below the
   daily reference point. The previous rules allowed trading within 1
   percent.

   "As China is Vietnam's largest trading partner, an adjustment of
   Chinese currency will have a negative impact on Vietnam's economy,"
   said the State Bank of Vietnam.

   The Chinese move prompted two consecutive days of decline in some major
   world stock markets. But trading in most Asian countries was up just
   after opening Thursday. U.S. stocks on Wednesday initially declined but
   recovered most of their losses by the end of trading.

   In a VOA interview, Peterson Institute scholar Nicholas Lardy says the
   change gives Beijing more flexibility in managing the economy.  He says
   the change also improves the chances China's currency will play a
   larger role in international commerce.

   Duke University business professor Campbell Harvey says China wants the
   yuan to eventually become a "reserve" currency like the dollar and the
   euro.  He says such currencies must be driven by market forces.

   Beijing's change in currency exchange policy brought criticism from
   several members of the U.S. Congress who say it continues a practice
   that gives Chinese exporters an unfair advantage, and hurts American
   jobs.

   Exchange rates are among many issues likely to be on the agenda for
   September's planned visit to Washington by China's President Xi
   Jinping.
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References

   1. http://www.voanews.com/content/china-devalues-currency-for-third-day/2916086.html