Traders Brace for Full-Blown Currency War as China’s Yuan Sinks

• Traders in Asia are bracing for a full-fledged currency war after a slide in China’s yuan past the 7 per dollar mark raised the prospect of policymakers allowing their exchange rates to weaken to remain competitive.
• Currencies slumped across the region Monday, with South Korea’s won tumbling to the weakest in three years after the offshore yuan plunged almost 2% to an all-time low of 7.1114. The yen and Treasuries rallied amid a flight to safety.
• “Without a doubt, the global currency war is here, and it’s a natural extension of the trade war that’s just taken a turn for the worse,” said George Boubouras, director at Salter Brothers Asset Management Pty in Melbourne.
• Fear over trade and currency wars is prompting monetary action around the globe. Various central banks have since cut their rates: New Zealand’s dropped its benchmark rate by 50 basis points; Thailand by 25 basis points and India’s by an unconventional 35 basis points. 

(Source: Bloomberg)