ET Now: There are lots of jitters across the globe with respect to the yuan devaluation and the implication that this can have across the globe. Your take?
Marc Faber: We have to put this in the context that China allowed the currency to float down by a tiny amount when we compare this with what the Yen weakness and the Euro weakness has been against the US dollar. Nobody is talking about that, but that the Chinese would let the currency depreciate by a tiny fraction is making headlines everywhere.
We do not know exactly why they did it because 2% devaluation is not going to help exports and even a 10% or 20% devaluation is not going to help exports meaningfully in a world that is slowing down. My view is that the central banks around the world would talk to each other and the Federal Reserve talks everyday to the ECB, to the Bank of England, to the Bank of Japan and so forth. The Fed may have very well told the Chinese why don't devalue their currency somewhat. This will give the Fed an excuse not to increase interest rate in September. - Excerpts from The Indian Economic Times
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.
China devalues to capture markets. Against Malaysian exports for example. imported Chinese made wheel barrows are sold at rm75 while Malaysian Prestar wheel barrows are retailed at Rm90. I have already replaced 3 Chinese inferior wheel barrows while the Malaysian made one is still in good condition. And with the fall of ringgit all Chinese imports cannot compete. I think this is one of the reason why China weakens the yuan
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