Daily Pulse: The Yuan Stabilizes, Gridlock Isn't Just in Washington

The yuan was devalued for a third day. The People’s Bank of China this time lowered its reference rate 1.1% but assured, in a rare press conference, that there is no basis for the currency to depreciate further. The fall has indeed slowed down, with the yuan down as much as 0.9% during the day but only 0.15% as of this writing, compared to nearly 2% each the past couple days. That’s not entirely “natural” of course: Chinese state banks have been selling dollars to prop up the yuan, as evidenced by the sudden peaks in the chart below. China’s sitting on $3.7 trillion in foreign exchange reserves to influence the currency market, much like it already plays with debts and stocks. As Bloomberg View columnist William Pesek beautifully put it, “China just added a chainsaw to its juggling act.”

Returning the yuan to a market-based value is a chip Beijing was always going to play, as it wants the IMF to grant it reserve currency status. Why it’s playing it now, conveniently devaluing the yuan just when Chinese exports need it, is what has investors worried. It suggests the Chinese government knows something we don’t about just how bad their economy is.  

“The central bank has withdrawn from the normal mode of intervention. But if you say the market has commonly recognized rules of the game, then those are still the rules that we lay out.”
- Yi Gang, deputy governor of the People’s Bank of China and head of its foreign exchange unit

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Greece is hours from ratifying a bailout deal that’s more like a wardship. In exchange for €85 billion over three years, Athens is essentially handing the keys to its creditors, committing for instance to “consult and agree” with the ECB, IMF and European Commission on any new legislation pursuant to its economy and agreeing to quarterly performance reviews. The troika reserves special rights to oversee a reform of the financial sector. The 29 pages of strict conditions include reaching a primary deficit (excluding debt) of 0.25% – a number only the best pupils in the EU reach, and certainly not France, not the UK, not even the very safe Netherlands – and eventually a surplus of 3.5% several years in a row! All that with a projected recession of 2.3% this year, 1.3% in 2016.

One area where European authorities are not taking over – the irony is too good to pass – is the migrant crisis Greece has had to handle in the midst of its own troubles. The government estimates 700 to 800 people are arriving on the Aegean island of Kos each day, many fleeing the war in Syria. Humanitarian agencies say the refugees have been locked in a stadium with little aid or supplies.

Pay attention to that asterix: the 2015 bar shows arrivals in the first 7 months of the year in Greece only.

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Gridlock isn’t just in Washington. Corporate India is losing patience over a Parliament so dysfunctional, its session is about to end today without a debate or vote on a sales tax reform that businesses say could add 1% to the country’s growth rate. More than 40,000 Indian citizens have signed a petition demanding that MPs settle their differences. The campaign gained national attention after top executives such as Godrej Group chairman Adi Godrej, Bajaj Auto chairman Rahul Bajaj and Biocon CEO Kiran Mazumdar-Shaw signed it, writes our India editor, Ramya Venugopal. The government may yet call a special session of Parliament to allow the debate to proceed.

In a LinkedIn Influencer post, Kiran Mazumdar-Shaw lays the blame squarely at the feet of the opposition Congress Party MPs, who interrupted debates yesterday. India lives on “an archaic economic model,” she argues, and cannot afford delays in reforming itself.

“Every day lost in Parliament is costing the country millions of jobs and billions of investment dollars.”
- Kiran Mazumdar-Shaw, founder and CEO of Biocon

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Tinder CEO Chris Payne got left-swiped. Founder Sean Rad will be back at the helm of the company, only five months after Payne was called in to bring more experienced management to the company. “It became clear after a few months that it wasn’t going to become a long-term fit,” board member Matt Cohler told re/code. Tinder is part of the Match Group, with Match.com and OkCupid – unlike in the dating world, there isn’t that much competition in the dating app world – which is set to go public this year.

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#Stat

48

The number of startups trying to crack
the automated meeting-scheduling business.
At least.

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#Image

Just look at that grin. That’s Daniel Negari, CEO of .xyz, an Internet domain registrar. The company had been adding 3,000 new registrations a day this month; it got more than 20,000 in the two days after Google announced its new parent company Alphabet’s home at abc.xyz. And it's still climbing. “This is the biggest thing that could have ever happened to us,” Negari told Bloomberg. You don’t say.

Missed the FDA taking down Kim Kardashion or the terrifying video of the blast in Tianjin, China? Check out John C. Abell's last update. 

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Photo: Rows of burnt out Volkswagen cars are seen near the site of a series of massive explosions at a warehouse in the northern Chinese port city of Tianjin. The explosions have killed at least 44 people and injured hundreds. GREG BAKER/AFP/Getty Images