Devaluation of China's Currency

Devaluation of China's Currency

Last week’s sudden devaluation of China’s currency raised significant concerns for the U.S. meat industry. The U.S. dollar was already at multi-year highs against the currencies of many major trading partners and competitors, and that disadvantage worsened when many of these currencies reacted to China’s move.  
U.S. Meat Export Federation Senior Vice President for the Asia Pacific Joel Haggard explains U.S. beef has no access to China and only a small number of U.S. pork plants are currently eligible to serve China. So the U.S. industry’s immediate concern is not necessarily direct meat trade with China, but rather the impact on U.S. pork and beef sales in other key export markets where purchasing power was further diminished.
Haggard: “Last week the Yuan devaluated 4 percent, the largest correction in several decades. It was a shock to the financial markets in Asia and analysts continue to ponder the reason behind the devaluation. But it coming just after quite poor July export numbers and a plethora of poor economic data. Some continue to believe it was a competitive devaluation to ensure that China’s export engine stays strong. Other currencies of major U.S. red meat export markets in Asia fell in reaction to the China devaluation last week including: Taiwan dollar, Korean Yuan and the Australia dollar — which fell to a six year low. Australia is a beef competitor with the U.S. but also the 7th largest export destination for U.S. pork.”

 

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