The Aussie dollar fell almost 2 per cent against the USD after China’s surprise devaluation of the Yuan. Prior to the announcement the AUD/USD was trading at 0.7440, a level it hadn’t traded at since the 20th July this year.
As the devaluation was announced strong selling saw the AUD/USD pair trade at a low of 0.73.
China’s appetite for iron ore and coal drove a decade long mining boom in Australia with companies investing almost A$400bn on projects between 2003 – 2012. The continued Chinese slowdown has stifled demand for natural resources seeing commodity markets and related currencies nose dive.
The New Zealand dollar sold off in a similar fashion to the Aussie. China was New Zealand’s top export market in the June quarter with sales worth $2.2 billion in the year to June, however New Zealand’s exports to China are down almost 30% in the year to June and with the weaker Yuan making imports more expensive it looks to be a trend set to continue. The NZD/USD was trading at 0.6630 prior to the announcement crashing to a low of 0.6535 NZD to the USD dollar.
