How does the devaluation of the renminbi impact global trade? [Policy Insights]
● The depreciation of the renminbi below 7 to the US dollar last week marks a significant development in the US-China trade war.
● In addition to increased production costs, companies may see a slight rise in the rate of inflation.
● Signals from Beijing indicate that after the initial drop, the renminbi is unlikely to devalue too dramatically, unless further developments in the trade war push Beijing towards a more aggressive monetary policy.
