China devalued its currency Tuesday following a decline in trade and economic growth, according to the Associated Press and other news outlets.

　　The People’s Bank of China set the value of the yuan 1.9% weaker against the U.S. dollar from Monday to Tuesday, its most significant one-day decline in about a decade.

　　According to the Wall Street Journal, Chinese customs officials reported over the weekend that July exports fell 8.3% compared to a year ago, and the move signals that Beijing thinks the country’s economy is weakening. A statement from the People’s Bank of China said the drop in the yuan’s value is due to reforms to make its exchange rate more market-driven.

　　The move caused stocks and currencies throughout Asia to tumble, including in Thailand, Singapore and the Philippines. China’s currency devaluation could also create tension with the United States and other trade partners that have accused Beijing of suppressing the yuan’s exchange rate, “giving its exporters an unfair price advantage and hurting foreign competitors,” the Associated Press reports.

　　By the end of the Asian business day, which is roughly 12 hours ahead of the United States, the renminbi had fallen to 6.36 per dollar in offshore trading, or a 2.7% drop, the paper said.

　　The shift is not expected to cause any immediate upheaval on the furniture industry. But further weakening against the dollar could make furniture exports from China more competitively priced against product made in Vietnam, Malaysia and Indonesia at a time when rising labor costs in China continue to put cost pressures on Chinese manufacturers.

　　China remains the largest exporter of furniture to the U.S. market, with about $12.2 billion in shipments to the U.S. in 2014, up 6% from the year before. Vietnam, the next largest exporter, shipped $2.6 billion of furniture to the U.S. in 2014, up 18% from 2013.

　　In the outdoor furniture category, China accounted for 90.6% of U.S. imports in 2014, according to figures from the U.S. Customs Service, U.S. International Trade Commission and U.S. Census Bureau. Indonesia was the second leading country with only a 3.5% share.

　　While this currency shift could be beneficial to importers buying finished goods from China, it could spell trouble for U.S. furniture manufacturers who are relying on China for much of their export growth. This is because the weakening of the currency against the dollar makes U.S. furniture more expensive for Chinese consumers.

　　While overall sales to China are still far below what they are in the U.S. market, the percentage growth remains strong as it does to other foreign markets, including the Middle East. Canada remains the largest market for U.S.-made furniture, with $1.25 billion in purchases in 2014, down 1% from 2013. China purchased $109.4 million of U.S.-made furniture in 2014, up 59% from 2013.

　　As much of the product is sold at high end furniture stores in China, a 2.7% shift in the currency may not have big implications right away. However, any further increases could force those U.S. furniture producers selling into the market to be more competitive in their own pricing, which could cut into profit margins.

(casual living)