Markets across most of Asia staged a relief rally Thursday, three days after China’s surprise devaluation of the yuan.
In Japan, the Nikkei 225 index regained 202.78 points, or 1%, to 20,595.55
In Hong Kong, the Hang Seng Index recouped 102.78 points, or 0.4%, to 24,018.80
Currencies like the Malaysian ringgit and the Indonesian rupiah rebounded from their lowest levels against the U.S. dollar since the Asian financial crisis in the late 1990s, while stocks from Hong Kong to Australia also bounced.
Among the largest currency movers were the New Zealand dollar and Taiwanese dollar, which each gained about 0.5% against the U.S. dollar.
The currency of South Korea, one of China’s major trading partners, was roughly flat at 1,171.60 won against the U.S. dollar, which traded as high as 1,195.40 won Wednesday.
The Bank of Korea kept interest rates on hold earlier Thursday, despite pressure to weaken the currency to stay competitive against China. Lower interest rates, a form of monetary easing, have the effect of pushing down a nation’s currency.
CHINA
In China, the CSI 300 hiked 59.34 points, or 1.5%, to 4,075.46.
On Thursday, the onshore yuan was down only 0.2% to trade at 6.3982 against the U.S. dollar compared with its previous close, after China’s central bank guided the currency lower for a third day. The U.S. dollar traded as high as 6.4486 yuan yesterday, when the onshore yuan fell nearly 4% after Beijing started broadly setting the daily rate at which the yuan trades more in line with market levels.
The yuan’s loss since China’s new exchange-rate regime was announced early Tuesday has unsettled investors over the implications of the sudden shift in the world’s second-largest economy. A lower yuan suggests China’s economy is weaker than the government is conveying through its data, and threatens to stoke competitive devaluations by countries that compete with China in the global marketplace.
China’s main stock index has held remarkably steady this month, amid government buying of stocks to stabilize the market. Shanghai lost nearly a third of its value in early July.
In other markets
In Singapore, the Straits Times Index gained back 30.29 points, or 1%, to 3,091.78
In Taiwan, the Taiex index added 28.36 points, or 0.3%, to 8,311.74
In Korea, the Kospi index hiked 7.99 points, or 0.4%, to 1,983.46
The NZX 50 dipped 19.53 points, or 0.3%, to 5,737.69
The ASX 200 Index was in the green 5.79 points, or 0.1%, to 5,387.87
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