China devalues yuan for third time in three days

It will also extend foreign-exchange trading hours in a potential move intended to forge the convergence of the yuan’s rate in China and the rate of the currency traded outside the mainland.

China’s biggest devaluation since 1994 has sparked fears of global currency war.

Mr. Liao says the People’s Bank of China will continue to intervene in money markets since the Chinese yuan is still not freely traded.

The PBOC reaffirmed earlier remarks that there was no basis for a sustained depreciation in the value of the yuan and quashed rumours the currency could be devalued by as much as 10% as “groundless”, Reuters said. “Now that this Rubicon has been crossed, keen attention should be paid to any other significant moves to prop up the Chinese economy”, Angus Nicholson, a market analyst at IG, said in a commentary.

The blue-chip index – which had plunged 212 points Tuesday after China initially cut the value of the yuan by 2% in a move to lower prices of its exported goods – ended the day with just a miniscule loss of one-third of a point.

Asian markets were mixed on Thursday, but China’s benchmark Shanghai index was up 0.74% by mid-morning.

The yuan has fallen nearly 4 percent in two days since the central bank announced the devaluation on Tuesday, but sources involved in the policy-making process said powerful voices inside the government were pushing for it to go still lower.

The dollar edged up about 0.2 percent against a basket of major currencies to 96.430, inching away from a one-month low of 95.926 set on Wednesday.

Compounding concerns over the world’s second-largest economy, three key indicators released on Wednesday all came in below market expectations, the latest data to show weakness.

The People’s Bank of China on Wednesday set the yuan’s reference rate at 6.3306 per dollar, 1.6 percent lower than Tuesday’s level.

Nigeria is exposed to China in terms of oil exports (as the U.S market dries up), and more recently the seven percent of foreign currency (FX) reserves Nigeria has denominated in Yuan. By devaluing the yuan, the Chinese government was catching up to the market, not trying to counteract it. “All of us policymakers around the world, including India, have to take notice of this action”, said Chief Economic Advisor Arvind Subramanian.

When China cuts its currency, the real estate mogul said, it is harder for the United States to “compete” in the global market.

The PBOC also said on Thursday that it would monitor “abnormal” cross-border flows after the devaluation raised fears that investors would seek to pull capital out of China in anticipation of further falls in the currency.