The Chinese authorities surprised the market this morning by devaluing its overseas trading currency the Yuan by a record 1.9% against the US dollar and indirectly against other currencies.

XE.com

China has unofficially maintained a fixed link with the dollar for many years and the move is seen as an attempt by the government to boost the country’s exports in an environment where reduced domestic demand and lower manufacturing activity is likely to slow economic growth rates below the target 7% per annum.

Data released over last weekend shows that China's exports fell by 8.3 percent in July, as demand weakened across the US, Europe and Japan.

One of the risks of the move is that it will trigger a flight of both Chinese and foreign capital from the country as the value of assets there fall with the value of the currency.

The People’s Bank of China says the change is a once off adjustment.