The People's Bank of China has unexpectedly cut the middle rate of the exchange between RMB and USD, joining the global trend of currency devaluation.

Anbound’s senior researcher, He Jun is of the view that the rate cut will bring the following impacts: -

(i)The downward economic pressure has opened up the door for RMB depreciation;

(ii)The devaluation of RMB is driven mainly by serious economic consideration;

(iii)The rethinking of China’s macro policy has begun;

(iv)The internationalization of RMB will slow down; and

(v)The devaluation of RMB will bring more accusations from America leading to more currency war.