The yuan's sudden devaluation rattles European markets, as the continent's top exporters brace for weaker sales in China. Sara Hemrajani reports.
China's surprise currency devaluation is rattling markets. Beijing's decision on Tuesday to slash its daily reference rate by 1.9 per cent has triggered the yuan's biggest one-day loss against the dollar in more than two decades. That effect is also being felt in Europe. The region's top exporters are concerned about sales in Asia's largest economy, as their products have now become much pricier for Chinese consumers. CMC Markets' Jasper Lawler. SOUNDBITE: Jasper Lawler, CMC Markets, saying (English): "We have a lot of luxury-goodmakers, carmakers that are very dependent on exports to China. Now, relatively, those exports are going to be more expensive inside China, likewise Chinese exports are going to be relatively more cheaper. So that's a disadvantage to these companies that were already highlighting difficulties in their business in China because of the slowing economy." Besides trade and business, there are widespread political ramifications. Analysts say Beijing's latest move could spark a global currency war. SOUNDBITE: Jasper Lawler, CMC Markets, saying (English): "It's going to be politically pretty difficult in Washington, and there are going to be calls for China to be labelled a currency manipulator. And probably not just inside the U.S. In the likes of Japan, which is also competing for Asian trade, you know they are devaluing their currency through a QE effort. So there's going to be this wider move towards currency wars." China's central bank says the devaluation is a 'one-off' adjustment in a bid to make the exchange rate more market-oriented. But there's a sense this could herald a new financial regime as the country looks to jump start stalling growth.