On October 8, 2024, China's onshore yuan experienced its most significant decline in over a year, dropping as much as 0.9% against the US dollar. This downturn has led to a ripple effect, weakening a range of Asian currencies, including the Australian dollar and the South Korean won.
The decline in the yuan came after a briefing by China's National Development and Reform Commission, which failed to announce new government spending pledges. Investors had anticipated aggressive stimulus measures to address the challenges facing the world's second-largest economy, but the lack of new commitments has dampened market sentiment.
The negative impact on the yuan has also been reflected in the rates market, where futures on Chinese government bonds briefly shifted to gains, while US Treasuries rallied. The overall investor confidence in the region appears to have weakened significantly due to these developments.
This situation underscores the broader implications for the international community, as fluctuations in China's economy can have widespread effects on global trade and financial markets.
Source: Bloomberg, October 8, 2024