TOKYO (Reuters) - The Chinese yuan skidded to one-year lows on Friday, shaking up Asian share markets and stoking concerns Beijing’s currency management could become the next flash point in a fierce trade dispute with the United States.
A man looks at an electronic board showing stock information at a brokerage house in Shanghai, China July 6, 2018. REUTERS/Aly Song
As the yuan fell to as low as 6.8128 to the dollar, major state-owned Chinese banks were seen selling dollars in an apparent bid by authorities to prevent a rapid fall in the currency.
Most equity markets in the region were spooked by the yuan’s continued slide. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was off 0.05 percent in volatile trade.
“There are several channels through which the yuan’s weakening is hitting Asian stocks. First, a weaker yuan challenges the competitiveness of other Asian economies,” said Shusuke Yamada, currency and equity strategist at Bank of America Merrill Lynch in Tokyo.
“The weaker currency also causes fears of capital leaving China and disrupting their capital markets, which could have knock-on effects on Asia. Lastly, a weaker yuan deepens trade war concerns.”
The Chinese currency fell to as low as 6.8128 to the dollar CNY=CFXS, its weakest level in more than a year, before paring some of losses to 6.7941 on yuan buying by the major state-owned Chinese banks.
Traders said the amount of dollar selling was not huge, and appeared to be aimed at controlling the pace of depreciation of the yuan, which has been battered over the past several weeks by the heated Sino-U.S. trade dispute.
Global markets are sensitive to any sharp moves in the yuan. China’s unexpected devaluation of the yuan in 2015 and the subsequent
