The Federal Reserve will begin its two-day meeting later on Tuesday, and Chinese markets will be closed for the New Year holidays starting from Jan 31. Investors remained wary over a further hawkish move by the Fed as they gauge the timing of potential monetary policy changes. Market participants expect a 25 basis-point rate hike at the Fed policy meeting in March and three more by the year-end.
At close of trade, the benchmark Shanghai Composite Index sank 2.58%, or 91.04 points, to 3,433.06. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 3.31%, or 79.18 points, to 2,313.06. The blue-chip CSI300 index decreased 2.26%, or 108.29 points, to 4,678.45.
CURRENCY NEWS: China's yuan hovered at a more than 3-1/2-year high against the dollar on Tuesday, despite weaker mid-point fixing by central bank, due to persistent corporate demand before the long holiday. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.3418 per dollar, 7 pips weaker than the previous fix 6.3411. The spot yuan CNY=CFXS opened at 6.3280 per dollar and was changing hands at 6.3296 at late afternoon, 8 pips firmer than the previous late session close.
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