The Chinese yuan has weakened against the dollar at its most rapid rate since last August

The trade of the year has come back to haunt markets. The Chinese yuan has weakened against the dollar at its most rapid rate since last August, when Chinese officials devalued the currency. This move is a throwback to a scary recent time — the turmoil at the beginning of this year after the Fed’s first rate hike since going to zero in December 2008.

In January and February, the yuan’s erosion against a strong dollar prompted people to move money out of the country, which spooked the country’s stock market, which spooked markets around the world. And now, that recent history is repeating itself. Along with more rate hike talk, a swiftly plunging yuan is back.

What’s more, the message coming out of China is just as confusing and aggressive as it was before. The government has been maintaining that the yuan is floating freely against a basket of currencies, as it has insisted since the end of last year. Again, the government is throwing a tantrum any time the foreign media talks about this issue. And for the first time since the disaster, the Chinese stock market experienced an almost-instant, eye-popping drop on Tuesday.
By Linette Lopez