The currency can trade within a 2% band above or below that.
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Shares of importers and firms with high U.S. dollar-denominated debt have been under pressure following last week’s yuan devaluation.
Utilities stocks (.SPLRCU), sought by investors when Treasuries yields are seen remaining lower for longer, sharply outperformed the benchmark index with a 0.4 percent gain.
The Shanghai Composite Index dropped 3.42 per cent, showing bailout measures were still falling short.
The broad-based S&P 500 dropped 0.26 percent to 2,096.92 points, while the tech-rich Nasdaq Composite Index lost 1.18 percent at 4,999.53. The gauge has fallen 20 percent from its peak in April to meet the common definition of a bear market. “Eventually the market will turn around”. The worldwide Monetary Fund praised the move, stating that it could lead to a more flexible yuan, which the IMF has set as a condition for including the yuan in its Special Drawing Rights currency basket. The move confirms an earlier proposal for a delay in the five-year reshuffling of the basket, which now doesn’t include the yuan. However, they later recovered their losses due to hopes the government in Beijing would step in to prop up the market, traders said.
He says even a fractional rise in US interest rates would be uncomfortable when the huge economies of China, Japan and the eurozone have been weakening. South Korea’s Kospi shed 0.6 percent to 1,926.94 and the Shanghai Composite Index was down 0.9 percent at 3,758.89.
The renewed concerns about the Chinese economy comes as investors await the minutes from last month’s Federal Reserve meeting for clues on when interest rates will be increased. “And that would most likely leave markets still wracked by uncertainty, about the Fed, global growth and China“.
The dollar remains on the back foot after minutes of the Fed’s July meeting indicated that officials are still looking to have more confidence in the inflation outlook before raising rates.
The prospects of higher rates supported the dollar against most other currencies.
Oil prices down near six-year lows also bit into the markets of the region’s export-reliant economies. Worries about future demand as the Chinese economy loses steam have also weighed on commodity prices.
U.S. stocks slipped overnight amid a selloff of energy stocks.
Read MoreBaffled by China’s late-day swings?
China’s main Shanghai stock index slumped more than 4 percent on Wednesday, leading Asian stock markets lower a day after a sharp fall rattled investors around the world.
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Apart from the likelihood of government-backed buyers being involved, there were also unsubstantiated reports that China’s central bank, the People’s Bank of China, may cut the reserve-ratio requirement for Chinese banks by 50 basis points this weekend.
