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Most other Asian currencies managed to rebound, and stock and commodity markets picked up. But the International Monetary Fund has certainly noticed, suggesting that “a more market-determined exchange rate would facilitate SDR operations, in case the renminbi were included...

The People’s Bank of China reformed the exchange rate formation system on August 11 to better reflect market development in the exchange rate of the Chinese yuan against the US dollar.

A cheaper yuan will help Chinese exports by making them less expensive on overseas markets.

Robert Kleinhenz, chief economist with the Los Angeles County Economic Development Corp., agreed.

Rupee decreased to below the Rs 66 level against the dollar for the first time in nearly two years in opening trade today.

On Friday, the People’s Bank of China set the yuan midpoint at 6.3990 yuan to the dollar, slightly stronger than Thursday’s levels.

European markets continued to fall during the trading session as fears of currency wars ignited a fresh bout of selling across global markets.

It also increased the amount of money available for lending by reducing the minimum reserves banks are required to hold by 0.5%.

The STOXX 600 Basic Resources Index, whose constituents are mostly mining stocks, and the energy sector fell 10 % and 8.8 % respectively, as commodities slumped to multi-year lows, with China being one of the world’s biggest users of metals and oil.

Shanghai: Shanghai stocks tumbled 6.41 per cent in early trading on Tuesday, extending the worst plunge for eight years after worries China’s faltering economy could hurt global growth sent world markets nosediving.

The Shanghai Composite Index was down 4.3 percent at 3,071.06 at midday Tuesday after falling 6.4 percent in the first minutes of trading.

The daily said that market capitalisation fell by Rs. “This is the biggest one-day slump in China since 2007”.

Fears that Chinese growth is weakening dragging down the global economy with it are already hammering commodities and world stock markets. For years, investors have been fretting that the market could drop sharply when the central bank starts raising rates.

The benchmark S&P index has accumulated 9.95 percent of losses in just five sessions.

Play video “China’s Economy: What Happened?”