Goldman Sachs chief currency strategist Robin Brooks note to clients:
- Says the devaluation of the yuan by the People’s Bank of China is an attempt to cushion it from rising along with the USD after the expected interest-rate increase from the Federal Reserve
- "This is about Fed liftoff most obviously and further dollar strength
- It certainly makes sense for China's policy makers to buy some flexibility ahead of Fed liftoff, in particular since the fix had become very peg-like in its stability in recent months"
- Says China isn't looking to push the yuan significantly lower
- "Our bias is that the move overnight was more about buying flexibility as opposed to the beginning of a large devaluation trend"
