China’s Yuan Puts Asian Central Banks on Defensive With New Risk

Just as Asia’s central banks were bracing for an expected increase in U.S. interest rates, China has given them another headache to deal with.

The decision by the People’s Bank of China to let its yuan weaken by the most in two decades is creating a bind for policy makers grappling with slowing growth and sluggish exports. If they let their currencies follow to stay competitive, they risk reviving inflation and a rush of money exiting to the U.S. dollar.