China raised the dollar-yuan parity on Wednesday, further weakening the local currency against the greenback, amid easing inflationary pressures. The dollar exchange rate USDCNY +0.16% was set at 6.3328 on Wednesday, compared with 6.3259 on Tuesday. The People's Bank of China allows the dollar to move 0.5% in either direction from the parity level on a given day. After allowing the yuan to rise against the dollar in 2011, Chinese authorities have effectively rolled back some of those gains so far this year. The dollar is currently buying 6.3422, according to FactSet Research data, rising 0.8% so far in March. In the year to date, the dollar is up 0.7%, after falling 4.5% in 2011.
Weak Yuan would lead to reduced exports to the Mainland from the US (aircraft etc.) which might trigger a recessionary phase in the US
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