China shares slipped on Thursday ahead of a deadline when tariffs from the US and China are due to be implemented, yuan gave back some of its recent gains against the dollar.
Markets are on edge ahead of Friday, when US tariffs on $34 billion worth of Chinese products - and retaliatory Chinese tariffs on US goods of the same value - are expected to kick in.
The declines in the yuan and stocks come the same day the central bank’s targeted cut of reserve requirements for banks took effect, which is expected to release additional liquidity in the financial system.
The blue chip CSI300 Index ended the morning session down by 0.59 per cent, and the Shanghai Composite Index was down 0.88 per cent.
Hong Kong's Hang Seng Index was also down about 0.8 per cent, reports Reuters.
At 0434 GMT, the yuan CNY=CFXS was trading at 6.6360 per dollar after ending the late night session at 6.6330.
The yuan's midpoint CNY=PBOC was set within market expectations, according to traders, but volume shrank on Thursday morning as investors went into a holding pattern on the eve of the tariff implementation on Friday.
Daily trading volume CNYSPTVOL=CFXT dipped to $7.951 billion as of 0324 GMT, about half of normal volume.
In June, the yuan suffered its worst month on record, falling 3.3 per cent against the dollar.
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