http://www.forexconspiracyreport.com/why-the-chinese-yuan-is-falling/
Why the Chinese Yuan Is Falling
Markets reacted negatively when Apple announced that iPhone sales in Greater China (China, Hong Kong, Taiwan) are going to fall. Investors and traders are taking this news as an indication of economic deceleration in China. Forex traders see this as an indication of why the Chinese yuan is falling.
Chinese Currency Manipulation
President Trump has accused China of manipulating its currency in order to maintain a trade advantage with the USA. He is not the first to say this and China is not the first nation to keep its currency weak in order to increase exports to the USA and elsewhere. Japan, Taiwan, South Korea, and others paved the way for this approach before China entered the picture.
China finds it easier to manipulate its currency versus the USD because the yuan does not trade freely in Forex markets. Nevertheless, China contends, always, that this is not true and that it merely acts to keep the yuan stable as opposed to working to drive its value artificially lower.
How Is the Value of the Yuan Set?
Every day the central bank of China sets a target range within which the yuan may trade, which in turn signals the market as to which direction it wishes the yuan to go. These days the trading range is hovering around 7 yuan to the US dollar. That is as low as it was ten year ago at the beginning of the financial crisis.
Although there is nothing special about the seven to one exchange rate it has psychological significance, especially due to the number of Chinese taking money out of the country. As the yuan promises to keep heading downward the folks who have made millions in the Chinese economic miracle are hedging their bets by moving money and purchasing property or businesses offshore. This capital flight threatens to undercut the Chinese economy just at it is weakening.