The world of finance received some interesting yet surprising news this week. As it turns out, neither China nor the US will competitively devalue their local currencies. Although such an agreement existed already, both parties felt the need to reaffirm their position. But what does this even mean for Bitcoin?
An Odd Agreement With Interesting Repercussions
Anyone who has been following the financial sector over the past year will have noticed two intriguing trends. The US Dollar has been on a rampage, gaining value against nearly every other currency except the Japanese Yen.The Yuan, on the other hand, has been going down in value every so often, all in a controlled effort by the government.
For the consumer and retailer, this is not good news by any means. An increasing currency value leads to changes in import and export. A currency losing value means people will be able to buy less for the same amount of money. Neither of these options is particularly good, but it is difficult to make things grind to a halt.
China and the US will no longer devalue their currencies by targeting exchange rates for competitive purposes. That does not mean the devaluation will suddenly stop, as China wants to reach a particular level for the Yuan. However, they are thinking of letting the “market decide” on what the CNY should be worth.
But there is more to this agreement than meets the eye. China and the US will use all of their policy tools to strengthen growth and boost job creation. Moreover, both nations will address excess capacity in the industrial sector to remove the negative impact it has had on trading. As one would come to expect, this process will take years to complete.
Some people may be wondering what all of this will do to the Bitcoin price in the coming months. Truth be told, there is no telling if this decision will have even the slightest effect. Consumers need to keep looking for alternative forms of investment, regardless of how the situation evolves. Whether or not Bitcoin is the answer to that problem, is an individual decision everyone needs to make for themselves.
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