Currencies Overview: Yuan is falling after China cut interest rates

The yuan tumbled to a seven-month low on Tuesday after China cut interest rates, while the Swedish krona slid to its lowest level since 2009 against the euro on persistent concerns about the real estate sector.

China cut the key interest rate for one-year and five-year loans by 10 basis points, in its first monetary easing in 10 months, as authorities seek to shore up a slowing economic recovery.

The decision led the yuan to decline 0.2 percent in internal trading to 7.1803 per dollar, to stay near its lowest level in seven months, which it recorded last week at 7.1819 per dollar. The yuan also fell in the latest offshore trading by 0.2 percent to 7.1769 per dollar, near last week’s low of 7.1916 per dollar.

“Chinese authorities are concerned about weak growth, but they fear re-inflating the real estate bubble, so expectations of significant stimulus factors for the real estate sector may not materialize,” said Chris Turner, head of global markets at ING.

The Swedish krona fell 0.2 percent to its lowest level since 2009 at 11.762 against the euro. It last traded at 11.723 per euro, close to the 2009 low of 11.8 crowns per euro.

Concerns about the real estate sector overshadowed the Swedish currency, and an expected interest rate hike from the Bank of Sweden next week could exacerbate investor concerns, as real estate accounts for 80 percent of household debt.

The Australian dollar fell about 0.8 percent to a session low of $0.6855 after minutes from the Reserve Bank of Australia’s latest policy meeting showed that the central bank’s decision to raise interest rates in June was “quite balanced”.

The euro rose 0.1% to $1.0936, supported by the European Central Bank maintaining monetary tightening.

The British pound was little changed at $1.2799 ahead of expected British inflation data on Wednesday and the Bank of England’s interest rate decision on Thursday.

The dollar recorded its highest level in seven months against the Japanese currency at 142.26 yen, despite a decline of 0.2 in the latest trading to 141.7 yen.

The dollar index, which measures the performance of the US currency against a basket of six major currencies, fell 0.1 percent to 102.34 points.