Why exactly would a country devalue their currency?
Kenny Polcari, managing principal at Butcher Joseph Asset Management, weighed in on why a country would devalue its currency and then broke down how what's going on with the yuan benefits China.
"So what it means is, let's talk about the US dollar for a moment because you know, everyone can relate to that. But when, when we cut interest rates and the dollar weakens. When the dollar weakens, our exports become more affordable, right? So our, our exports become less expensive than those foreign countries, which then boost trade for us, right? We export more because foreigners will buy more of our products, right? And so, therefore, that's the same mentality when it happens around the world. Whatever country weakens their currency, their exports become more affordable to the exporting countries. And so when you talk about weakening the currency, you're talking about trying to build your exports, trying to create more demand for your products because they become cheaper," said Polcari.
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