Yuan Falls as Beijing Cools Market

SHANGHAI—China’s yuan fell sharply against the U.S. dollar on Monday after Beijing unexpectedly introduced new rules intended to curb the flow of foreign currency into the country, which are also expected to slow the yuan’s recent appreciation.

The yuan rose on news that China is taking steps toward internationalizing the currency. The WSJ’s Shen Hong explains what the move means for opening the country’s capital markets.

The rules appear to have scaled back investors’ expectations of further gains by the yuan in the short term by effectively limiting banks’ ability to bet against the dollar versus the yuan in China. But analysts say the yuan’s longer-term outlook remains bullish because of China’s huge trade surplus and sound economic fundamentals....more

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