China on Monday allowed the yuan to rise more than 7 per dollar for the first time in more than a decade. Beijing may want to tolerate further weakening of its currency in the face of tightening economic conditions with the US. The sharp decline of 1.4% in the Chinese yuan came after the Bank of China (PBOC) closed its currency trading range at 6.9225 against the dollar.
PBOC has fully given the green light to reduce the yuan, and the volatility of these days is due to a 10% tariff on an additional $ 300 billion in Chinese imports on September 1, says Ken Cheung, said Ken Cheung, senior Asian FX strategist at Mizuho Bank in Hong Kong.
Masashi Hashimoto, currency analyst at MUFG Bank, says: The decline could be the biggest shock for the yuan this year. The Bank of China does not appear to be trying to provide a weaker yuan in the face of US trade pressures. The decline in the yuan appears to be due to sales pressure.
The devaluation of the yuan affects many currencies in the region.
The Australian dollar fell 0.5% to $ 0.6770. Won Korea declined 1% to its three-year low at 1.218.3 for the dollar, while the new Taiwan dollar fell more than 0.5% to its two-month low of 31.61.
The US dollar also declined to 105.80 against the yen. The euro also rose 0.15% to $ 1.1122, recovering from its two-year low of $ 1.1027 on Thursday.