TOKYO (Reuters) - The Chinese yuan skidded to one-year lows on Friday, unnerving investors in Asian stock 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
Spreadbetters expected European stocks to open lower as volatility gripped Asia, with Britain’s FTSE falling 0.1 percent and Germany’s DAX and France’s CAC both shedding 0.25 percent.
The yuan fell to as low as 6.8128 to the dollar in the onshore market, before 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 shaken by the yuan’s continued slide. MSCI’s broadest index of Asia-Pacific shares outside Japan was last up 0.1 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 yuan had pulled back to 6.7940 to the dollar after initially falling to the low of 6.8128. The currency took a beating earlier in the day after China’s central bank lowered its yuan midpoint for the seventh straight trading session.
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
