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Thursday, June 30, 2016, 18:04

Yuan sees biggest quarterly fall on record

By Agencies

LONDON - China's yuan hit a six-month low and chalked up its biggest quarterly fall against the dollar on record on Thursday.

The currency, trading at 6.6 per dollar by 0950 GMT, is down roughly 3 percent since March and if falls as far as suggested, 2016 could mirror last year's record 4.5 percent drop.

Emerging markets (EM) were broadly higher on the day with stocks, bonds and many currencies showing a comfortable lead over developed market peers at the year's half way mark.

MSCI's main EM shares index was up 1 percent, 2.8 percent on the month and 4.5 percent for the year after some stellar performances in Latin America and Russia following an 85-percent rebound in oil prices since mid-January.

Polish and Romanian markets remained subdued in the wake of last week's Brexit vote, though mostly the concerns appeared to have largely eased. low experts the Institute of International Finance (IIF) said the early signs showed the UK vote to quit the EU had had an no immediate impact on emerging market trading.

It said daily EM portfolio flows data suggested outflows were a fairly minor US$210 million on "Brexit Friday" and that for June as a whole foreign investors had pumped a net US$16.7 billion into emerging market assets.

In Asia, a widely expected move saw China's Taiwan trim its interest rates for the fourth consecutive meeting in a bid to shore up flagging growth. The 0.125 percentage point cut, took rates to 1.375 percent, a level last seen in mid-2010. Czech Republic and Romania are likely to keep their rates steady later, but Mexico could hike its rates to relieve some of the recent upward pressure on the peso.

"The consensus is for a 25 basis point hike in Mexico but we are in the minority that think they will stay on hold. We think the pressure on the peso has probably eased enough for them," Fage said.

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