China’s Sudden Currency Plunge Raises Risk of a 2015-Style Panic
- Strong dollar triggers worst month on record for offshore yuan
- History shows sharp declines can intensify capital outflows
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When China’s tightly managed currency depreciates dramatically against the dollar, it can be hard to stop.
More than six years after China’s shock 2015 devaluation roiled global markets and spurred an estimated $1 trillion in capital flight, the yuan is weakening at a similar pace. Onshore it’s lost nearly 4% in eight days, while the offshore rate is heading for its worst month relative to the greenback in history. Selling momentum is the strongest since the height of Donald Trump’s trade war in 2018.