The People's Bank of China uses its massive reserves to buy or sell the yuan to maintain a desired exchange rate. It's been pegged to the U.S. dollar in some way for decades.
So, a strong dollar has often meant a strong yuan.
That hurts Chinese exports, and it's been a sticking point in China's ongoing negotiations to secure the yuan's "reserve currency status" at the International Monetary Fund (IMF).
So, when China devalued the yuan by 2% on August 11 - the biggest one-day fall since 1994 - it roiled the global markets.
I wasn't shocked, though. It was a logical move after all, and its implications open a nice profit opportunity for us...