The second downward revision to the People‘s Bank of China‘s daily reference rate for the renminbi has today intensified talk that a fresh round of “currency wars“ is about to sweep across Asia. We think that is unlikely. So far, the drop in the renminbi has not been large enough to make much difference to export competitiveness, and we do not think the PBOC is looking to implement a series of competitive devaluations. In short, there is no need for Asian policymakers to panic.
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