1 What did China do?
China tightly controls the value of its currency by setting a daily rate for the yuan versus the dollar. In China’s domestic market, traders are allowed to push the yuan 2% stronger or weaker for the day. But the People’s Bank of China often ignores those market signals when it sets the next day’s rate, sometimes setting the yuan stronger versus the dollar when the market is signaling it sees the yuan as weaker. The central bank said it will now take the previous day’s trading into account – and it attributes that move to Tuesday’s sharp drop.