China’s central bank has begun helping the country’s exports this year. It has unsettled traders by intervening heavily in currency markets for the last week, pushing the CNY down steadily.
On this Tuesday, the fall continued, bringing the currency’s loss against the US dollar for the year to 1 percent. However, the CNY increased 3 percent against the US dollar last year. The recent decline also interrupts what had seemed to be a steady rise in the Chinese currency, which had been eroding the competitiveness of Chinese exports. The Chinese government hope to increase the export for keeping the growth of Chinese economy.
The performance of China stock market may be the worst stock market in the world during the past several years and the future of it is still negative. On the other hand, more and more investment come from China to other countries. Although the Chinese economy is still growing faster than almost any other countries, the pace is slowing. China may not be the economic engine in the world. Hence, The domestic market cannot support the continue economic growth. It should rely on the growth of other countries.
Therefore, the lower CNY is the strategy of Chinese government to keep the continue economic growth.