As the ECB committed to a quantitative easing (QE) program that will see it print money to buy up 60 billion euros worth sovereign bonds from March until the end of September next year, China’s yuan opened sharply weaker
China weakened the yuan’s daily reference rate against the U.S. dollar by the most since March last year. The country too has been pushing through stimulus measures in recent months as growth splutters, cutting interest rates for the first time in over two years in November 2014. In December last year, the central bank allowed banks additional room to lend, to drive inflation and growth.
A weaker currency helps boost exports and nudge inflation higher, which is at a five-year low. The central bank’s weaker guidance for the currency comes as central banks across the world push their currencies lower through aggressive monetary easing policies in a bid to kick-start growth and revitalize flagging economies. The U.S. economy though is showing signs of recovery, which has sent U.S. dollar rallying, pushing currencies across the board, down further. And, the U.S. Fed is expected to raise interest rates this year.
