Renminbi Revaluation

Having spent $300 billion supporting the renminbi over the last year, and with exports down 8.3% Y-o-Y and its economy slowing, China finally capitulated and let its currency depreciate. China may again need to lower interest rates and reserve ratios. Beijing is suffering from industrial overcapacity, a weakening real estate market, overextended banks and an equity bubble. While this may boost exports, basic economic reforms remain much needed.