In the international currency market, against the US dollar, the currency of China, the country of the largest economy, has fallen sharply. As a result, numerous forex traders are counting losses.
China's renminbi, or yuan, saw its biggest drop against the dollar on Wednesday since its debut as an international currency in 2011.
According to the latest market prices, it costs 7.2386 yuan to buy 1 dollar outside mainland China. This is Wednesday's news. A further decline in the currency on Thursday will add to market depression. Even a sudden rise in the value of the yuan will have adverse effects.
According to the British media BBC, the yuan has reached its lowest level since the global financial crisis in 2008.
In early September, the US central bank, the Federal Reserve, raised interest rates in the situation of slow of the country's growth. After that, the value of the dollar increased against other currencies of the world.
In addition to the yuan, the world's strongest currency, the British pound, suffered its biggest drop in 50 years on Friday.
Amid this forex market situation, the major Asian stock markets collapsed on Wednesday due to the news of a massive fall in the Chinese currency. Japan's Nikkei, Hong Kong's Hang Seng and South Korea's KOSPI fell more than 2 percent in early morning trading on Thursday.
The People's Bank of China (PBOC), China's central bank, is working to prevent its currency from devaluing. As part of this, they have reduced the foreign currency savings limit in Chinese banks.
Many people and businesses consider foreign transactions and investments in dollars safe during the crisis. This has contributed to the strengthening of the US dollar against other currencies.
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Currently, due to the effects of the recent war, the use of other currencies is increasing due to the problems in some countries in trading in the US dollar. The list includes Chinese Yuan, Turkish Lira, Russian Ruble and Indian Rupee.
In this situation of international trade, the value of the Chinese currency fell.