China’s central bank on Tuesday sent the yuan down by nearly two percent against the US dollar. The move is believed to be part of a broader strategy to bolster exports and revive the local economy.
Foreign companies are expected to be negatively affected in several ways, as the currency discrepancy squeezes profits for goods exported to China. The devaluation will also be competitively advantageous for China-based companies exporting to other markets.
GM suggests its manufacturing presence in China will serve as a hedge against potential trouble from currency devaluation. The company claims its exposure is “limited and manageable” and will not have a material impact on its global financial performance.
“We continue to expect strong results in China will be sustained through the remainder of the year,” the automaker added.
GM last week reported record sales in the world’s largest automotive market. Joint-ventures with Chinese automakers sold a total of more than 1.9 million vehicles in the first seven months of the year, up 3.3 percent from the same period last year. Performance was down by four percent in July, however, as the local auto market continues to feel the effects of the ongoing economic slump.
Leave a Reply