Aussie at risk over Yuan devaluation

Australian economy as well as its dollar faces risk over today's devaluation of Chinese Yuan via fix by Peoples bank of China (PBOC).

Over the last few months, analysts were expecting PBOC not to devalue its currency, though economic stagnation demanded such, since the central bank kept tight grip over its value.

Today's move by PBOC suggests that the central bank might remain not only open to devaluation it might be encourage, since it would help China's exports to recover.

Although what has been good for China, has historically been good for Aussie, this time it may not hold true.

China is Australia's largest trading partners. Australian economy has already faced heavy headwinds due to slowdown in China's economy and fall in commodity prices.

In spite of all that, Australia benefitted a lot due to low exchange rate of AUD/CNH.

With todays and further devaluation that advantage will get eroded.

This year alone Aussie had depreciated almost 10% against Yuan and around 20% in last 12 months before today's move.

Aussie is currently trading at 4.675 against Yuan, up 1.5% today.

With Chinese concerns coming to haunt Australia once again, Aussie remain sell against Dollar.