China on Wednesday devalued its yuan currency for a second day running. It could have an effect on American consumers and investors. Here's how.
If you like your goods made in China, a weakened yuan is your friend. When the yuan falls in value, goods imported to the USA from China become cheaper. And China makes a lot of things from cars and computers to clothing and furniture. Conversely, American businesses will find it more expensive to sell their goods to China.
The Federal Reserve is poised to raise extraordinarily low interest rates as employment returns to healthier levels. But a stronger dollar against the yuan could depress inflation because Chinese goods are cheaper. That, in turn, could lead the Fed to hold off on upping rates this fall because it already is worried about inflation being too low. Those with mortgages rates explicitly tied to base rate moves would benefit. Savers looking for more interest — not as much.