What does the devaluation of the yuan to the world

For the second day in a row, China reduced the value of its currency, the yuan.

China is now the largest trading partner for many African countries.

In an effort to make the trade of goods much easier, some countries have introduced into their system yuan for foreign currency. In 2011, the Nigerian central bank promised to keep between 5% -10% of foreign exchange reserves in yuan with dollars and euros. At that time, the Chinese economy had the highest growth rates in the world. Nigeria believed demand from the east will help to protect the local currency, the naira against the volatility of oil prices set in dollars.

Later Kenya, whose port is a major gateway for Chinese products, announced plans to create a clearing house for the Chinese currency. She hoped that the entry into the port of Chinese customers who sell their manufactured goods may pay the excise duty and taxes. The immediate effect of the devaluation of the yuan can not be seen or measured, but countries that have taken steps to transactions of Chinese money may see pressure on their own local currencies.

In general, other African countries have limited exposure as they still price their goods in US dollars. However, as China is now their biggest customer, they could feel the devaluation of the yuan indirectly.

If the yuan devalued buy goods priced in the dollar becomes more expensive for the Chinese. Therefore, the sale of goods, such as platinum, copper or coal could become more expensive, which can reduce the search. So when there is no immediate effect, but in the medium and long term sales of African and African commodities exchange could receive shock.

Under normal circumstances, the devaluation of the yuan will have a huge negative impact on the Brazilian economy. China is the main trading partner of Brazil and a weak yuan would mean the loss of trade with the Asian giant. But these are not normal circumstances in Brazil, as the country faces its worst economic crisis in two decades. One of the few positive side effects of this is that the Brazilian real has dropped to its lowest level in 12 years, favoring Brazilian exports abroad. While the Chinese currency fell by about 3% since January, the Brazilian real lost 23% of its value. If this was a targeted currency war, Brazil will surely "win" the race to the bottom. Brazil's economy is in crisis due to China largely, but that has more to do with the overall slowdown in the Asian economy and end the cycle of commodity boom in recent years not only currency fluctuations.

India imports heavily from its eastern neighbor. The volume was worth $ 60 billion. The devaluation of the yuan would mean that companies that buy from Beijing, will now have to spend less. The companies that make electric and electronic goods in India imported in bulk the necessary components from China, so they will be happy. Most analysts, however, expect the benefits of moving on to consumers here. But there are several sectors where India is competing with China to sell to the world. Manufacturers of textile and chemical manufacturers could feel it a little more difficult now because of global market Indian products could become less attractive than those of China. This can be a problem for the economy as a whole, as Indian exports declined for seven consecutive months already, so the decline of the yuan may further affect the trade balance.