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China rattles markets by devaluing its currency

China devalued its currency Tuesday, a move to make the country’s exports cheaper and boost a slowing economy. In turn, the Yuan fell nearly 2 percent against the dollar, the most in a decade. Judy Woodruff reports.

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    Now to China's decision to devalue its currency, the yuan. This effort to revive economic growth in the country shook up global markets today and sparked fears among U.S. exporters.

    The decision to devalue had an instant effect: the yuan currency fell nearly 2 percent against the U.S. dollar, the most in a decade.

    Beijing's goal, to make China's exports cheaper and boost an economy that's been slowing markedly.

  • WOMAN (through interpreter):

    The export sector is facing great pressure. Inventories are high. Manufacturing, including investment, is facing overcapacity. So, in order to stop sliding export figures, we need to adjust the currency rate.


    Indeed, China's exports were down sharply in July, by more than 8 percent. Even so, reaction to the currency move was mixed on the streets of Beijing.

  • MAN (through interpreter):

    It should be a good thing for the people's lives. Exports will be easier to export, and it will be easier to sell things.

  • MAN (through interpreter):

    In the short term, it doesn't look like it will have any particularly obvious impact.


    Meanwhile, the European Commission welcomed the prospect of a weaker Chinese currency.

  • ANNIKA BREIDHARDT, European Commission Spokeswoman:

    To the extent that the changes announced overnight reflect a shift in operating regime, allowing the daily fix to better reflect the balance of demand and supply in the foreign exchange market, we consider that this is a positive development.


    U.S. exporters have long complained that China's currency valuation is already too low, giving its goods an unfair advantage.

    But, in Washington, the State Department was reluctant to criticize today's move.

  • MARK TONER, State Department Spokesman:

    We have pressed China to continue financial reforms. And while we want to see additional economic reforms we believe that are needed, but we have seen progress. And that has included the recent commitments by China that were secured at the most recent security and economic dialogue.


    China is the latest large economy to devalue its currency. In the past two years, Japan and the European Union took similar steps.

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