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ForexLive Asia-Pacific FX news wrap: Offshore yuan hits a record low

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The
People’s
Bank of China set the onshore yuan reference rate a mammoth 400+
points lower (i.e. higher for USD/CNY) today, to the weakest for the
onshore yuan since February of 2008. Offshore yuan responded by
dropping to its lowest ever (i.e. highest on record for USD/CNH)
around 7.3650.

In
addition, the PBOC and the State Administration of Foreign Exchange
(SAFE) relaxed a cross-border funding rule, aimed at encouraging
capital inflow. The weakening yuan has been working to encourage
capital outflow, a key concern of Chinese authorities.

Shares
in mainland China and Hong Kong fell further in morning trade, though
not close to epic drop on Monday:

ADDED – since posting, China’s National Team has been in scooping up stocks and sending Chinese indexes higher.

Across
major FX moves were subdued. We had comments again from Japan’s
finance minister Suzuki, with little impact. AUD, NZD and others gave
a little ground against the US dollar on the PBOC reference rate
setting.


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