China's yuan plunges most since aftermath of devaluation in 2015

(Feb 8): China’s yuan sank the most since the aftermath of the shock devaluation of the currency in August 2015 after trade surplus figures missed estimates and amid speculation policy makers will step up efforts to rein in gains.

The onshore spot rate weakened 0.6% to 6.3195 against the dollar as of 2:02 p.m. in Shanghai, after dropping as much as 1 percent earlier. The currency extended losses after China reported a much narrower trade surplus than expected, on the back of a jump in imports. Volatility surged, and the gap between onshore and offshore rates tripled compared with the same time on Wednesday.

The yuan’s climb to a two-year high this week had fueled speculation officials may seek to curb one-way bets, and that they will grow more tolerant of capital outflows:

• The foreign-exchange regulator said Wednesday that it sees “more noticeable” two-way yuan moves
• A front-page Economic Daily commentary on Thursday said more fluctuations are likely
• The country has resumed its Qualified Domestic Limited Partnership plan after a two-year halt, granting licenses to about a dozen global money managers that can raise funds in China for overseas investments, Reuters reported on Thursday, citing people it didn’t identify.

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