The People’s Bank of China (PBoC) has taken measures to prevent the further devaluation of the Chinese yuan (CNY) and offshore yuan (CNH). The PBoC set the USD/CNY reference rate at a much lower level than expected, signaling its intention to maintain the value of the yuan. Additionally, Chinese state banks intervened in the spot market to sell USD/CNY, driving the currency pair lower temporarily and allowing investors to buy at a more favorable rate. As a result, USD/CNY has returned to little change for the session.
China also released its August Industrial Profits data, showing a slower year-to-date decline of around -11.7% compared to -15.5% in July. However, the month-to-month change in August alone was a more encouraging +17.7% year-on-year. In Australia, the monthly Consumer Price Index (CPI) for August exceeded expectations, with a 5.2% year-on-year increase. The Australian dollar initially reacted positively but then returned to little net change for the day. Major foreign exchange markets experienced minimal or no net change.
In Asian equity markets, the Nikkei 225 in Japan declined by 0.5%, while the Shanghai Composite in China and the Hang Seng in Hong Kong increased by 0.3% and 0.6%, respectively. The KOSPI in South Korea decreased by 0.3%, and the S&P/ASX 200 in Australia declined by 0.2%. Overall, there was limited volatility in most major currencies and equity markets during the trading session.