Fed watching China stocks rout, Republicans slam yuan slump
By Howard Schneider and David Lawder
WASHINGTON (Reuters) - The Federal Reserve was closely monitoring the sell-off in stocks that shook world markets on Thursday, while U.S. Republican presidential candidates took aim at Chinese policies they claimed are designed to gain a trade advantage.
U.S. lawmakers, meanwhile, were uncharacteristically silent about a further deterioration in the value of China's currency, after the yuan CNY= CNY=CFXS fell for an eighth day on investor fears about China's economy.
Ohio Governor John Kasich and U.S. Senator Marco Rubio of Florida, both Republican contenders for the White House, said the recent dive in the value of the yuan against the U.S. dollar was ultimately about making the country's exports cheaper.
"They're now rapidly trying to goose up exports," Rubio told reporters on the campaign trail in New Hampshire.
China last year gave markets a greater role in determining the yuan's value, a shift welcomed by the International Monetary Fund and others that have urged the world's second-largest economy to let its currency float more freely.
But when China allowed the biggest fall in the yuan in five months on Thursday, it undermined regional currencies and sent global stock markets .MIWD00000PUS tumbling, with investors taking it as a sign of economic weakness and further devaluation to come.
Shanghai .SSEC stocks slid 7.3 percent before authorities halted trading for the second time this week.
Though China has moved to make the yuan's value more broadly market-based, linking it to a basket of currencies rather than the dollar, "there remains considerable confusion in the market about what policy-makers' true intentions are," said Charles Collyns, chief economist at the Institute of International Finance. Continued...