Chinese yuan was devalued
The People’s Bank of China cut the yuan’s daily fixing rate by a record 1.9% provoking the biggest decline in the national currency since January 1994. This way China is trying to support exports which slumped by 8.3% in July.
According to Chinese central bank, the move was a one-time adjustment based on a new way of managing the exchange rate that better reflected market forces. Earlier the regulator kept the yuan broadly stable against the US dollar to encourage greater global usage in a push for official reserve status at the IMF. However, last week the International Monetary Fund delayed a decision to endorse the yuan as a reserve currency.
The action of Chinese authorities increased concerns about the condition of the nation’s economy. Other currencies like Australian and New Zealand’s dollar fell versus USD as their exporters want to stay competitive versus China.