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China’s Currency Fix Means More Volatility Everywhere Else

Global FX volatility hit its highest level since 2011 last month.

By Lucy Meakin and Liz Capo McCormick, Bloomberg | Updated on October 08, 2015

China’s record draw on its foreign-exchange reserves is proving to be a catalyst for exaggerated price swings in currency markets around the world.

The People’s Bank of China slashed its holdings by the most ever last quarter to prop up the yuan after its shock devaluation in August. It’s burned through close to half a trillion dollars since the middle of last year, equivalent to twice the size of Greece’s economy and draining a key source of liquidity from world markets.

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