Forex Videos

Why is that Yuan losses accelerate at the start of 2016? China's Yuan fell the most since August hastening its decline in extended trading hours on speculation the authorities stopped supporting the currency late in the day. The Monetary authority's new system of setting the yuan's daily fixing uses the previous day's close as one of the factors. Major Chinese banks which tried to sell dollars during most of the day signficantly reduced their offerings after 4 PM. The central bank's tolerance for a weaker yuan is much higher now as it wants to make the currency more market driven. The yuan will need to fall a lot more in order for the currency to match a true market value.
As yuan losses accelerate Forex traders will anticipate an increasingly weak currency until at some point the yuan will overshoot and then correct. The Chinese Stock market had a tenuous connection to the Chinese economy and that is why it boomed and then went bust last year. So long as the Chinese economy continues to slow down the yuan will fall as well. It may be a long road ahead for Chinese government to convert into a more consumer driven economy which is the best path towards more stability.