China's forex intervention spurring 'vicious circle'

Singapore

CURRENCY wars - in which currencies are devalued to boost exports - appear inevitable given the thick brew of high debt and faltering global demand, and as structural reform remains unlikely, senior Rabobank analysts said at a briefing on Tuesday.

This comes as China's intervention to prop up the yuan has created a vicious circle, with liquidity paradoxically tightening as more capital is being pumped in. China's central bank has cut interest rates, and pumped funding into the banking sector.