China’s devaluation of its currency plus strong dollar could hit Apple’s

“The market is spooked by concern that the yuan may enter a devaluation trend and there’s some pressure for capital outflows given the fact that the U.S. may raise interest rates soon”, said Wei Wei, an analyst at Huaxi Securities Co.in Shanghai.

Metal and mining stocks declined the most as a weaker yuan spells trouble for them to push sales both in the global market as well as in India.

The central bank fixes the currency at a certain level against the US dollar every morning, allowing investors to trade the currency within a 2% band.

In recent months, the central bank has kept the yuan’s value roughly in line with the dollar, which has surged even as currencies of other developing countries have sagged.

There are many implications of the sudden devaluation of the currency by the second biggest economy in the world, that many call to be the real number one economy in the world.

UK-listed commodity and luxury goods stocks have dropped in early trading after China devalued the yuan by 1.9 per cent in a bid to combat its economic slowdown.

The Swiss franc hit its weakest since the Swiss National Bank scrapped its cap on the currency on January 15, trading at 1.08675 francs per euro.

Alongside that drag on the economy, McKay also suggests that the PBOC may be looking to move away from its currency “peg” while containing speculation towards future movements in the yuan. It looks increasingly likely that the Chinese authorities would not mind if market forces squeezed the yuan of some of its unbearable strength.

Its controls have been a stumbling block in gaining admittance to the select group, now comprised of the US dollar, Europe’s euro, British pound and Japanese yen.

Chinese exports fell 8.3% last month, however despite that there was a trade surplus of $ 44 billion. Holders of yuan can preserve value by purchasing bitcoin and then cashing out to yuan, later, if bitcoin were to advance; or, cashing out to US dollar if bitcoin price were to decline.

That said, the PBoC’s chief economist has said that the central bank will stabilise market expectations to ensure an orderly transition to the new regime.

The July reading was well below the estimate for a 1.5 per cent fall in a Bloomberg survey and compared with a rise of 2.8 per cent in June. Some of Asia’s most interventionist central banks are for now holding their nerve on currency policy after a major devaluation in the currency of one of their top trading partners, China. The PBoC said the exchange rate has deviated from the market rate by a large margin for a long time, and this action was required to improve the renminbi exchange rate.