The Tuesday session in Tokyo followed overnight declines on Wall Street, where the Dow Jones Industrial Average plunged more than 700 points, the S&P 500 dropped nearly 3% and the Nasdaq Composite fell 3.5%. It was the worst percentage drop for all three indexes this year.
Investors around the world scrambled to sell on worries about how much President Donald Trump's worsening trade war will damage the global economy. Beijing allowed its yuan to fall past the politically sensitive level of seven to the dollar on Monday following Trump's threat last week to extend punitive tariffs to an additional $300 billion of Chinese imports. Also, the Ministry of Commerce announced it was suspending promised purchases of American farm products.
On Tuesday, the yuan fell further to 7.052 to the dollar in early trading. That came after the U.S. Treasury Department officially labeled Beijing a currency manipulator, a status that opens the way to possible additional sanctions.
The escalating dispute between the world's largest economies is rattling investors unnerved about a global economy that was already slowing and falling corporate profits.
CURRENCY NEWS: The yen strengthened against the US dollar on Tuesday, as investors opted a safe harbours amid escalation in the Sino-US trade war. The Japanese yen strengthened as much as 0.4 per cent to 105.51 against the dollar, before turning sharply lower and losing 0.6 per cent to trade at 106.61.
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