With the US and Chinese economies being in different phases of the business cycle, it is unsurprising that the Chinese authorities might have come to the conclusion that greater flexibility of the renminbi against the US dollar was warranted. Notably, a move in this direction is also consistent with the authorities’ long-standing goal of transitioning to a more market-determined exchange rate.
It is worth noting that rating agencies and other international financial institutions are confident that Serbia’s public finances are sustainable and that the increase in the fiscal deficit and public debt in a pandemic environment is temporary and justified.