Repercussions of China Currency Depreciation on the World

The market immediately responded to the news. Oil dropped 4 percent on the news, while Copper dropped 8 percent.

b) Low-interest rates by the Federal Reserve might stay on
Worsening economic indicators in one of it’s major trading partners might convince the U.S Federal Reserve that interest rates should stay lower for a little more time. This would mean more public money investments, whether in tech stocks or emerging economies, especially now that China has become a less attractive investment destination.

c) Currency Wars
A lot of people have been talking about currency war for a long time, but they never really happened? However, if China continues devaluating its currency to bail out its falling exports, then expect other economies, already facing the brunt of a falling global demand, to follow suit in attempt to get a competitive advantage in exports.

d) Deflation
The world has long seen China as a savior, its ever-enlarging economy propelling the world towards larger growth. However, falling export numbers, stock market collapses, less than projected growth and currency devaluation are all major fault-lines, and a sign of a slow-down in the world’s most populous nation. This will heavily impact the global economy, particularly developed nations.

Next, we have written about the Stock Market collapse, and how all these moves affect India

http://www.slideshare.net/myvaluetradeofficial/chinas-turbulent-economy-summer-of-2015

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