The Asian market last: China's yuan falls to the lowest level in more than a decade

admin August 5, 2019

22 2 minutes read

The Asian market last: China's yuan falls to the lowest level in more than a decade

The yuan weakened sharply after the People's Bank of China set its daily currency exchange rate at 6.9225, the lowest rate since December. China's central bank creates a "band" every day where the yuan's value can only move 2% up or down.

In mainland China, a US dollar now buys around 7,0273 yuan. In trade outside China, where the yuan is moving more freely, it stands at 7,0777 against the dollar. Previously, it had slipped to record low offshore.

The symbolically important reference point for 7 was last crossed during the 2008 financial crisis. Group, in a research note.

He added that the weakening of the yuan will trigger fears of capital flight from China, along with a subsequent tightening of economic conditions in the Chinese economy.

Citigroup strategist Gaurav Garg saw the decision to "unleash" the exchange rate as a potential response to trade tensions that "could further complicate US-China negotiations."

"US authorities have been sensitive to currency movements," he wrote in a research note. "They have repeatedly blamed currency manipulation for curbing the impact of trade tariffs and have insisted on currency stability as an important part of any US-China agreement."

Markets all over Asia also fell into early trade. In Hong Kong, where protest leaders asked people to take part in strikes across the city, the Hang Seng Index ( HSI ) fell as much as 3.1[ads1]%, the biggest drop since October.

Japan's Nikkei sank 2.4 % and South Korea Kospi ( KOSPI ) lost 2.2%.

Shanghai Composite Index ( SHCOMP ) drops 0.8%. Australia's S & P / ASX 200 fell 1.5% and Taiwan's Taiex plunged 1.1%.

"Risk aversion had certainly been the latest topic for markets, one to weigh both equities and currencies in Asia," said Jingyi Pan, IG Strategy's Market Strategist. "Trade jitters' buzz for the Asia markets is entering the healthy week."

Trump caught up with the country's trade war with China last week when he announced Friday plans to slap a 10% tariff on $ 300 billion in value. This means that all Chinese exports to the United States will soon be taxed.

Meanwhile, Beijing said it was ready for a fight.

Here are some of the other big gripes on Asian markets at 11:30 in Hong Kong.

HSBC shares that listed in Hong Kong fell 1.6% after British banking giant announced John Flint will resign as CEO. HSBC said a change was needed because of an "increasingly complex and challenging global environment."
Hang Seng Bank, a unit of HSBC and one of Hong Kong's largest lenders, tumbled 4.4%. In an income report, the bank cited "a challenging operating environment" and slows economic growth in the city. It projected full-year GDP growth for Hong Kong to reach between 1% and 1.5%, down from last year's 3%. "Shifts in retail sales and growth in commerce signal that the economic environment will remain challenging," the bank said.
Previous Week The S&P 500 Index ( INX ) and Nasdaq Composite Index ( COMP ) had both the worst week of the year, down 3.1% and 3.9% respectively. Dow Jones Industrial Average ( DJIEW ) was down 2.6% for the week.