Q&A: What yuan devaluation means for China, other countries

BEIJING (AP) — China rattled global financial markets by devaluing its currency in what it said was an effort to make its exchange rate more market-oriented.

The move could help Chinese companies by making their products less expensive in global markets.

U.S. stocks sank, partly on fears about a worsening economic slowdown in China.

[...] it links the yuan's value to a basket of currencies the composition of which is secret but is believed to be dominated by the U.S. dollar.

[...] economists doubt that a one-day 2 percent drop in the yuan, which is a move China has called a one-time event, will do much damage to exports from the United States or other countries.

[...] the plan to let market forces play a bigger role is something the U.S. government itself has called for.

True, a cheaper yuan hurts U.S. exporters and likely depresses U.S. inflation, which is already below the annual 2 percent rate the Fed targets.

If the U.S. economy continues to look healthy, wrote JP Morgan Chase economist Michael Feroli, "the yuan move will largely be a sideshow " by September's Fed meeting.