LONDON (Reuters) - The Chinese yuan slid to its lowest in more than a year on Friday, further undermining global sentiment and stoking worries Beijing’s currency management could be the next flash point in a trade dispute with the United States.
FILE PHOTO: A worker shelters from the rain under a Union Flag umbrella as he passes the London Stock Exchange in London, Britain, October 1, 2008. REUTERS/Toby Melville/File Photo
The yuan slid as low as 6.8128 to the dollar in the onshore market after the central bank set a weaker fixing for the currency for the seventh straight session, forcing a volatile session in Asian stocks.
After falling 0.4 percent, MSCI’s index of Asia-Pacific shares outside Japan ended the day 0.6 percent higher as the yuan rebounded. Market participants suspected state intervention to support the currency.
The drop in the yuan came a day after U.S. President Donald Trump said he was concerned that the “Chinese currency was dropping like a rock” and the strong U.S. dollar “puts us at a disadvantage”.
His comments knocked the dollar, forcing it off one-year highs against a basket of currencies
But the yuan, hurt by concerns over the China-U.S. trade war and a slowing Chinese economy, has shed 7.6 percent of its value against the dollar since the end of the first quarter of this year.
“A weaker Chinese yuan remains a source of risk for global currency markets – and the large dollar-yuan fixing higher by the (central bank) overnight requires some cautionary monitoring,” ING Bank told clients.
Investors have vivid memories of China’s sudden devaluation of the yuan in 2015 and the subsequent turmoil in global financial markets as investors worried about the stability of the world’s second-largest economy.
European markets
