Flexibility will allow RMB to support local economy

CHINA

Fidelity's Tom Stevenson on the implications of China de-pegging its currency from the dollar

The recent decision by China to allow greater flexibility in its exchange rate policy in the face of growing international pressure was received positively by global financial markets. This reaction is justified by the likely economic consequences of a stronger renminbi, which should be beneficial for certain types of investments. However, given the gradual manner in which the renminbi will be allowed to appreciate, the overall impact will not be especially large and, with sizeable global imbalances remaining, underlying trade tensions are unlikely to disappear anytime soon. China’s r...