Chinese devaluation of Yuan surprises markets

China carried out the biggest devaluation of the renminbi in two decades to boost its slowing economy signalling an escalation of international currency battle. Shocking markets and risking a clash with US. China’s central bank has devalued the Yuan to 4 year low and the lowest rate against the US Dollar, resulting in the Chinese currency falling 1.8 per cent against the dollar and 2.2 per cent against the Euro on Tuesday 11th August 2015.
Chinese stocks opened lower, extending further losses from yesterday, Offshore Yuan fell another 9 handles against the USD after China closed, as global markets turmoil after china extends currency war to another day. However, this has not stopped many gold bears from using this as an opportunity to disparage gold, as the recent gold rout has cost China and Russia £3.51 billion ($5.4 billion).
The People’s Bank of China said the centre of the yuan’s trading band was reset 1.9 per cent lower at Rmb6.2298 per US dollar compared with a Rmb6.1162 rate the day before – its weakest point against the US dollar for almost three years.
Carmaker BMW fell 2.7 per cent and luxury goods group swatch was weakened by more than 3 per cent. Burberry was down 35p at 15,72 in the FSTE100.
The currencies of nations that export to China were caught unawares in the first round reaction. The Australian dollar fell 1.4 per cent, to $0.7305 against its US counterpart and the New Zealand dollar fell 1 per cent to $0.6548. South Korea’s won weakened 1.8 per cent, with won 1, 17931 required to buy one US dollar. Japan’s Yen slipped 0.2 per cent. The Taiwan dollar weakened 1.8 per cent to touch five year low against the dollar. The Singapore’s dollar also hit a five year low , so also the Philippine peso. Copper and oil prices tumble.