China devalues Yuan, Asian stocks tumble

In what came as a shocking news for the currency markets, the tightly-controlled Chinese currency depreciated to record low of almost 2% against the U.S. dollar, hitting a 3-year low.

In a bid to control the Chinese economy that has shown signs of fragility, China's central bank has devalued its currency Yuan, to make it more market-friendly.

In what came as a shocking news for the currency markets, the tightly-controlled Chinese currency depreciated to record low of almost 2% against the U.S. dollar, hitting a 3-year low. People's Bank of China (PBOC)'s statement said that it had changed the way it calculated the currency's daily midpoint against the greenback. It added that the move is a one-time adjustment, to relieve pressure off exports.

Markets did not react conducively to the decision of PBOC to devalue the yuan. Nearly all the Chinese indices are trading in red, with Shanghai Stock Exchange Composite Index down 0.69%, while CSI 300 Index relegating by 0.79%. Nikkei 225 fell by 0.23% and TOPIX declined by 0.13%.

The yuan dropped to 6.2950 per dollar, while the euro declined to $1.0985.