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Australian markets open flat on Friday China's biggest yuan rate move in 11 years
(about 4 hours later)
Australian markets have opened flat on Friday, after a volatile session for US stocks overnight. China has raised the exchange rate for its currency, the yuan by 0.56% against the US dollar, from the previous day.
The benchmark S&P ASX 200 kicked off Friday's session a touch higher by 3 points at 5,228.80. The central bank - People's Bank of China (PBOC) fixed the yuan rate at 6.4589 to the US dollar on Friday.
Over in South Korea, the Kospi index opened lower by 0.39% at 1993.03. That is the biggest increase in nearly 11 years.
China only allows the yuan to rise or fall 2% on either side of the PBOC's daily fix, to avoid volatility and maintain control over the Chinese currency.
Analysts have pointed out the move is not a reflection of future yuan policies.
Some have argued the PBOC's move is a knee-jerk reaction to US dollar weakness overnight. The US dollar had fallen sharply against the yen after the Bank of Japan surprised markets and decided against any extra monetary easing.
"The expectation for a stronger yuan fix was laid by the gains for the yen after the Bank of Japan announcement," said Patrick Bennett, a strategist at Canadian Imperial Bank of Commerce in Hong Kong.
According to data compiled by financial news network Bloomberg, Friday's increase is the strongest daily move by the PBOC since July 2005.
China spooked global investors with a surprise devaluation in August last year, when it guided the currency down by nearly 5% in a week.
Asian markets lower
Market reaction to the move, however, has been muted. On the mainland the Shanghai composite index had lost 9.06 points or 0.31% to 2,936.53 by midday.
Over in Hong Kong the Hang Seng index lost 1.35% or 288.56 points to 21,099.47.
Many Asian markets have traded lower, following overnight weakness in US markets.
South Korea's Kospi index was down by 0.5% at 1990.94.
Over in Australia the benchmark S&P ASX 200 was relatively flat, at 5,247.60.
The region's biggest market, Japan is shut on Friday for a national holiday. The benchmark Nikkei 225 index ended the shortened trading week down 5%.The region's biggest market, Japan is shut on Friday for a national holiday. The benchmark Nikkei 225 index ended the shortened trading week down 5%.
Losses on Wall Street accelerated on Thursday afternoon, with some investors rattled by a 3% decline for shares in Apple. US markets closed lower overnight. Losses on Wall Street accelerated on Thursday afternoon, with some investors rattled by a 3% decline for shares in Apple.