Markets taken aback by China’s move to devalue the renmibi to boost flagging economic growth
Markets were taken aback by China’s move to devalue the renmibi nearly two per cent against the US dollar, to boost China’s flagging economic growth.
Following weak trade and inflation data, central bank People’s Bank of China fixed its currency down 1.9 per cent, in a move which caused the Chinese currency’s biggest one-day drop since 1994, but is expected to support exporters and combat the country’s economic slowdown.
The devaluation took markets by surprise, with Singapore’s, Australia’s and South Korea’s currencies falling over one per cent.
Mining shares and commodity prices also took a beating on the news, with equity markets in Europe and the US slumping.
Global oil benchmark Brent crude fell nearly three per cent, and is once more trading below $50 a barrel.