The Great Decline

Another day and another chance for China’s central bank to lower the guiding rate for the yuan. It is the third consecutive time the bank has taken such action with its currency. Thursday’s rate of 1% down against the dollar is a smaller margin than the shock cuts earlier this week.

The bank had on Tuesday announced it would start setting the daily rate based partly on the previous day’s trading, bringing the yuan closer to a free-floating currency. However, the big move erupted with concerns over a currency war to boost China’s exports.

There has been recent data showing a decline in Chinese exports, adding to the worries that the world’s second largest economy was headed for a slowdown. A weaker yuan will set for products to be cheaper abroad, which will make Chinese companies more competitive in an international market.