The Chinese government went on the war-path. Experts believe that the country entered a new and critical phase of the global currency war. Having announced a sharpest-ever devaluation of the national currency, Beijing obviously signaled that it was not able to overcome the internal economic recession which exceeded the bounds of the Empire. Currently, this problem became a global one. The People’s Bank of China lowered the exchange rate by 1.9 percent in the hope that a cheap renminbi will help to increase the volume of Chinese exports. In addition, the yuan's devaluation will explicitly put pressure on China's commercial rivals such as South Korea and Japan, as the Chinese authorities followed their example and debased the national currency's exchange rate. Broadly speaking, the government sends a signal to investors that it is ready to use all available tools to solve the problem of slow growth. Devaluation is among these implements, as a regular reduction of interest rates could not change the situation for the better. Assumed measures will have an impact on all investors, and losses are expected to be enormous. However, Chinese officials note that this decision is "a modest step" towards the currency liberalization. Recent developments may be a new challenge for the US Fed. A stronger US dollar puts downward pressure on imported goods' prices and is reflected on the inflation rate, and, thus, it can affect the timescales of decision-making on rates increasing.
