Lower prices continuing to spread deflation

Just as crashing oil prices are inducing cash-crunched producers to pump even more product, weaker global demand and falling export prices are flooding even more cheap goods throughout the world. Better for buyers, but bad for corporate sales, profits, recklessly levered financial markets, tax revenues and GDP. Also bad for those banking on a rebound in commodity prices. See: Yuan devaluation digs a hole for commodities.

China devalued the yuan in a move that rippled through global markets, as policy makers stepped up efforts to support exporters and boost the role of market pricing in Asia’s largest economy.

The central bank cut its daily reference rate by 1.9 percent, triggering the yuan’s biggest one-day drop since China ended a dual-currency system in January 1994. The People’s Bank of China called the change a one-time adjustment and said its fixing will become more aligned with supply and demand.

China devalues

Here is a direct video link.

This entry was posted in Main Page. Bookmark the permalink.