China devalued its currency, the yuan, in August 2015 by about 1-3% against the US dollar. This was done to boost China's export industry by making Chinese goods cheaper overseas. It also aimed to drive growth in China's financial markets and establish the yuan as a stronger trading currency. The devaluation impacted other countries by putting further pressure on struggling economies like Greece and making imports to countries like Europe and Australia more expensive through currency effects. It also risked exacerbating global deflationary pressures.

1. China’s
Currency Devaluation
Kiều Linh

2. AGENDA
OVERVIEW
CHINA’S MOTIVATION BEHIND ITS
ACTION
THE IMPLICATION OF CHINA’S
DEVALUATION BEYOND ITS BORDER

3. OVERVIEW What is currency devaluation?
Devaluation is the decision to reduce the value of a
currency in a fixed exchange rate.

4. OVERVIEW The impact of currency devaluation (Advantages)
1
Lead to job
creation
2
An improvement in
the current account
deficit.
3
Higher rates of
economic growth.

5. OVERVIEW The impact of currency devaluation (Disadvantages)
DIS AD VAN TAGES
Cause
inflation
Scare off
international
investors
OVERVIEW The impact of currency devaluation (Disadvantages)
DIS AD VAN TAGES
The purchasing
power of
citizens abroad
The cost of their
debt repayments

6. OVERVIEW The impact of currency devaluation depends on many factors
IN RECESSION
DEMAND IS INELASTIC
LOST COMPETITIVENESS

7. CHINA’S MOTIVATION
BEHIND ITS ACTION When did China’s currency devaluation
take place?
3 % DROP IN THE VALUE OF THE
YUAN
11/08: 1,9
%; 12/08:
1,6 %;
13/08:1,1 %
THE
YUAN’S
SPOT
PRICES:
1.4 %
YUAN/USD
= 6.115

8. TO BOOST THE EXPORT
INDUSTRY
TO DRIVE THE FINANCIAL
MARKET
TO SET UP A YUAN-CENTERED
& TRADING BLOC
CHINA’S MOTIVATION
BEHIND ITS ACTION

9. THE IMPLICATION OF CHINA’S INTERVENTION BEYOUNG IS BORDER
EVEN MORE
PAIN FOR
GREECE
WAR
CURRENCY
EUROPE
DEFLATION
A LESS
COSTLY
CHRISTMAS
A TOUGH
TIME FOR
OZ
THE
BUTTERFLY
EFFECT
CHINA’S CURRENCY
DEVALUATION