The yuan experienced a significant decline across both onshore and offshore markets in Asia, reaching its lowest level since November. It fell to as low as 7.2989 per dollar in the onshore market and reached a trough of 7.3379 in the offshore market.
This decline follows a drop on Tuesday, triggered by a series of disappointing Chinese economic data. In response to this, Beijing unexpectedly implemented cuts to its primary policy rates, as authorities worked urgently to support an economy that has been rapidly losing momentum over the past few months.
The pessimism in China had a ripple effect, causing the Australian dollar – often regarded as a liquid proxy for the yuan – to drop to its lowest point in nine months.
Ray Attrill, Head of FX Strategy at National Australia Bank, remarked, “Seeing is believing. The markets still want to see much more tangible evidence of not just monetary, but fiscal support coming through to revive growth (in China).” He further stated, “Until they see any evidence of that, they’re still going to take the view that not enough is being done or that China isn’t sufficiently serious about bolstering growth to really bring about a meaningful shift in sentiment.” Attrill anticipated ongoing downward pressure on the Australian dollar for the time being.
