Chinese stocks dropped again on Tuesday as the yuan weakened against the dollar, despite a stronger midpoint set by the People’s Bank of China.
The fall gave way to fears that the country may be aiming for further devaluation of the currency, despite insistence from the central bank that it will not happen.
The Shanghai Composite Index closed down 6.1 percent at 3,749.12 points in its biggest daily decline since July 27, after a three day winning streak, and the CSI300 index fell 6.2 percent at 3,825.41.
The central bank made its biggest injection of funds into the markets in more than six months earlier this morning, adding to worries that liquidity was tightening as investors moved more capital out of the country.
The People’s Bank of China made a surprise devaluation of the currency last week by nearly 2 percent, shocking the markets and prompting two days of further currency decline.