China’s Yuan Sinks to Six-Month Low on Worsening Trade Outlook
Bloomberg.com — A selloff in China’s currency deepened after the central bank moved to free up capital for banks and as investors braced for the next round in an escalating trade dispute with the U.S. Stocks headed for a two-year low, while bonds rose.
The yuan slid as much as 0.72 percent to 6.5414 per dollar, its weakest since Dec. 28, while the offshore exchange rate dropped for an eighth day. The Shanghai Composite Index declined 0.7 percent and the yield on 10-year debt fell to a two-month low. The People’s Bank of China on Sunday said it will cut the required reserve ratio for some banks by 0.5 percentage point.
A slew of negative factors — from a trade war with the U.S. to the risk of a credit crunch — has weighed on China’s financial markets in recent weeks. The benchmark Shanghai stock index is on the brink of a bear market after tumbling almost 20 percent from its recent high, while analysts have started cutting their forecasts for the nation’s currency. Investors have been piling into the relative safety of government debt instead. […]