Indian Rupee Slides To 3-week Low Against US Dollar

In the offshore yuan market, where the central bank usually takes a hands-off attitude, the yuan remains weak and hit 6.6446 in early trade, the lowest level in more than four years.

Global equities dropped sharply on Monday after a 7 per cent slide in Chinese stocks triggered by weak economic indicators rekindled concerns over global growth.

China’s central bank fixed the yuan at a 4 1/2-year low and mainland Chinese shares fell 7 per cent. Stock exchanges halted trading on the first day so-called circuit breakers came into effect.

Oil prices jumped as Saudi Arabia’s execution of a prominent Shi’ite Muslim cleric at the weekend spurred regional anger and geopolitical tensions in the Middle East. Riyadh cut ties with Iran after protesters stormed the Saudi embassy in Tehran.

Elsewhere, Asian stocks closed lower after worse-than-expected manufacturing data, a weaker yen and the imminent expiration of a ban on the share sales by major stakeholders.

But now that China is maturing into a more developed market, its appetite for raw goods has eased considerably. “But we often see erratic trades at the start of year”. It was down as much as 467 points earlier in the day. Dow futures were down 1.7 percent, while S&P 500 futures shed 1.8 percent.

Investors across the rest of Asia hoped for the best and nudged Japan’s Nikkei up 0.4 percent, recouping just a little of Monday’s 3.1 percent dive. It has tended recently to perform well at times of market uncertainty as investors who had held euro-funded carry positions, in which the a low-yielding currency is borrowed and then sold in favor of a riskier higher-yielding one, have bought back euros.

Manufacturing surveys showed Chinese factory activity contracted for a 10th straight month in December and at a faster pace than it shrank in November.

The indicator has been falling since the beginning of previous year, except for the month of October, and the decrease reached 318.35 billion yuan in August, the largest monthly drop in history.

Huang Cengdong, an analyst for Sinolink Securities in Shanghai, said he expects more turmoil in the Chinese stock market ahead of corporate earnings reports.

Saudi Arabia said Sunday it is severing diplomatic relations with Iran, a development that could potentially threaten oil supply. The yield on the 10-year Treasury note fell to 2.24 percent from 2.27 percent.

In the currency market, the safe-haven Swiss franc was bid up, gaining 0.4 per cent against the euro to 1.0849 per euro.

Oil prices were in the red, with Brent down 1.3% to 36.73% a barrel and West Texas Intermediate down 1.07% to $36.37 a barrel at 1425 GMT. The Aussie was down 0.1 per cent at $0.7184 after tanking 1.3 per cent on Monday.