China's currency stance tests world policymakers' sense of perspective
SINGAPORE Jan 8 (Reuters) - Assessments of China's intentions after it let the yuan depreciate more quickly this week possessed some qualities of a fairground mirror, with policymakers in nearby Asia far less alarmed about risks of a "currency war" than those further away.
As global currency and stock markets shivered on Thursday, Mexico's Finance Minister Luis Videgaray vented fears that China's machinations could lead to a spiral of competitive devaluations, echoing a complaint commonly heard from Brazil in recent years.
"There is a real worry that in the face of the slowing Chinese economy the public policy response is to start a round of competitive devaluation," Videgaray said during an event in Mexico City.
The unpleasant start to 2016 caused by tanking Shanghai shares and the yuan's latest slip had analysts also flagging the possibility that Beijing, in its haste to stem the rot in the world's second-largest economy, was weakening its currency to revive sagging exports.
A view among Asian neighbours, however, was that China had more to lose from capital outflows than it could gain from increased exports if the yuan was allowed to sink too far.
Latin American currencies weakened far more sharply than most Asian currencies last year, a factor that probably helped shape the differing perspectives between policymakers from these regions.
"I doubt China would seek a weaker yuan in the way that could shake the confidence of its economy," a senior official at Japan's Ministry of Finance told Reuters. "Blatant yuan devaluation would prompt heavy criticism from the U.S. and other countries, but it's not the time to worry about a currency war," said the official, whose own government faced similar suspicions over polices adopted three years ago that led to a steep drop in the yen.
U.S. Republican presidential candidates have seized on the yuan's slide to lambast China over policies they say are designed to gain an advantage in trade.
"They're now rapidly trying to goose up exports," U.S. Senator Marco Rubio of Florida told reporters on the campaign trail in New Hampshire. Continuación...