Two days after the People’s Bank of China surprised the world by letting the renminbi slide, investors and policy makers are still puzzling over whether it was a benign move towards a market-driven exchange rate or a competitive devaluation.

In particular, with the dollar having strengthened sharply against currencies throughout the emerging world over the past few months, some in Washington fear the US is becoming the loser in a spreading currency war.

But while concerns about destabilising exchange fluctuations are valid, fears of a zero-sum conflict look overdone. Flexible exchange rates are an important part of global economic adjustment, and it is quite logical that the renminbi should currently be under downward pressure. If its trading partners are to accept this, though, China must work hard to prove that this move is a genuine and permanent move towards a floating currency, not an engineered depreciation to deliver a short-term boost to exports.