Currencies in Asia tumbled Tuesday and stocks in China fluctuated after China’s central bank devalued its tightly controlled currency.
In Japan, the Nikkei 225 index subsided 87.94 points, or 0.4%, to 20,720.75
The yen was down against the U.S. dollar, at ¥124.79 per U.S. dollar, compared with ¥124.61 at late Monday in Asia.
In Hong Kong, the Hang Seng Index surrendered 22.91 points, or 0.1%, to 24,498.21.
The Korean won was among the hardest-hit currencies Tuesday, falling 1.6% to 1,177.4 per U.S. dollar compared with its opening level of 1,159.
The offshore yuan which trades freely, is now 2.2% weaker versus the U.S. dollar. The currency rose to as high 6.3601 from its close 6.2136 late Monday. It is currently at 6.3535.
In the domestic market, the yuan fell as low at 6.3360 from its Monday closing level of 6.2097, or a 2% depreciation versus the U.S. dollar. The move was limited by the lower boundary of the yuan’s official trading band. The yuan has since stabilized at around 6.3220, or a loss of 1.8% against the dollar.
The Australian dollar has fallen by more than one U.S. cent since the yuan announcement. The currency is trading at $0.7327, down from $0.7435.
Stock markets elsewhere in the region fell amid worries about China’s economic challenges.
CHINA
Chinese shares wavered between positive and negative territory, a day after the market posted its largest daily percentage gain in a month
In China, the CSI 300 dropped 17.7 points, or 0.4%, to 4,066.67.
The onshore yuan suffered its biggest one-day loss in two decades after the move, which sent the Singapore dollar to multiyear lows.
The step by the People’s Bank of China marks an effort to make the yuan’s movements more market-driven. China sets a midpoint, or daily fixing, for the value of the yuan against the U.S. dollar. The yuan is allowed to trade 2% above or below that daily reference rate.
Now, the yuan’s fixing will be based on how the yuan closes in the previous trading session. As a result, the yuan’s fixing against the U.S. dollar was lowered 1.9% Tuesday from the previous day.
Foreign investors have continued to sell Shanghai stocks this month via a trading link with Hong Kong, after that program saw the first month of outflows in July.
The central bank’s move comes after disappointing Chinese trade data over the weekend cast doubt on the economic health of the world’s no. two economy. It also follows the International Monetary Fund’s recent announcement to delay its decision on whether to include the yuan in its basket of reserve currencies.
In other markets
In Singapore, the Straits Times Index dumped 43.6 points, or 1.4%, to 3.153.06
In Taiwan, the Taiex index subtracted 72.7 points, or 0.9%, to 8,394.14
In Korea, the Kospi index lost 16.52 points, or 0.8%, to 1,986.65
The NZX 50 dipped 42.67, or 0.7%, to 5,822.35
The ASX 200 Index fell 35.92 points, or 0.7%, to 5,473.23
