China’s decision to squeeze speculators out of its currency is causing pain for local companies and individual investors.
The yuan fell on Monday to its lowest level in 10 months against the dollar after the government over the weekend doubled the currency’s daily trading range. The decision, foreshadowed by months of hints by Chinese officials, followed a weekslong campaign by the country’s central bank to weaken the yuan.
China is attempting to reduce the amount of money flowing into the country from foreign investors looking to profit on a rise in the yuan. The government sees this cash as inflating asset prices and making the economy more vulnerable to financial shocks.