Saturday, 9 January 2016

US and European stocks fall, renminbi may need to fall further

US and European stocks fell on Friday despite a rebound in Chinese stocks.

The S&P 500 fell 1.1 percent and the STOXX Europe 600 fell 1.5 percent.

Earlier on Friday, though, the Shanghai Composite Index had jumped nearly 2 percent after authorities moved the renminbi higher and suspended the stock market circuit breaker mechanism.

The strengthening of the renminbi could prove temporary though.

According to estimates by Bloomberg, a decline to 7.7 yuan per dollar, from about 6.6, is needed to boost gross domestic product expansion by 0.7 percentage point.

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