THE Australian dollar has lost more
than one US cent after China made the surprise decision to devalue its
currency by almost two per cent.
At 0700 AEST on Wednesday, the Australian dollar was trading at 73.03 US cents, down from 73.16 cents on Tuesday.
Early on Wednesday morning it fell as low as 72.84 US cents, from 74.24 US cents just before the Chinese central bank announced its largest reduction in the yuan’s trading range.
NAB currency strategist Emma Lawson said the PBoC’s decision had pushed down the value of most major currencies against the US dollar and had also weakened share markets.
“Markets are a little wary of the implications of China’s devaluation yesterday. Combine that with uncertainty around the US Federal Reserve’s upcoming interest rate hike,” she said.
“Asian foreign exchange markets were weaker and dragged the Australian dollar with it, but much of that move was seen in the Asian session.” Ms Lawson said markets would closely watch to see if the PBoC continued to move the yuan lower in its daily trading range decisions.
“If the new fix methodology is adhered to, as noted, then we should see further weakness today,” she said.
“All eyes (will be) on today’s setting of the midpoint for the allowable trading band.”
Early on Wednesday morning it fell as low as 72.84 US cents, from 74.24 US cents just before the Chinese central bank announced its largest reduction in the yuan’s trading range.
NAB currency strategist Emma Lawson said the PBoC’s decision had pushed down the value of most major currencies against the US dollar and had also weakened share markets.
“Markets are a little wary of the implications of China’s devaluation yesterday. Combine that with uncertainty around the US Federal Reserve’s upcoming interest rate hike,” she said.
“Asian foreign exchange markets were weaker and dragged the Australian dollar with it, but much of that move was seen in the Asian session.” Ms Lawson said markets would closely watch to see if the PBoC continued to move the yuan lower in its daily trading range decisions.
“If the new fix methodology is adhered to, as noted, then we should see further weakness today,” she said.
“All eyes (will be) on today’s setting of the midpoint for the allowable trading band.”
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