China devalues its currency a third time as Aussie dollar bounces back

China has significantly devalued its currency for a third day in a row, but the Australian dollar barely moved on the news.

A man walking past oversized Chinese yuan (RMB) notes, US bank notes and other foreign currency seen out side a foreign exchange in Hong Kong Source: EPA

China has moved the trading range for its currency significantly lower for the third day in a row.

The People's Bank of China devalued the yuan by 1.1 per cent to 6.4010 yuan on Thursday, following a 1.6 per cent devaluation on Wednesday and 1.85 per cent devaluation on Tuesday.

That Australian dollar barely moved following the latest news, which is in contrast to the one US cent falls it suffered each of the previous two days.

At 0700 AEST on Thursday, the local unit was trading at 73.76 US cents, up from 72.62 cents on Wednesday.

The People's Bank of China on Wednesday announced a 1.6 per cent devaluation of the yuan, following a record 1.85 per cent cut the previous day.

The PBoC said the move was an attempt to prop up China's weakening export sector.

The Australian dollar suffered one US cent falls on both of the days China devalued its currency.

NAB currency strategist Emma Lawson said that was because of concerns about the weakness of the previously booming Chinese economy but now traders are starting to focus on the more positive aspects of the story.

"The other side to the story is that this depreciation is a loosening of monetary conditions for China and that it should boost demand, over time," she said.

"It isn't specifically clear if the subsequent rally in US equities, and higher yields was a result of the calming of concerns about China's depreciation but it does perhaps assist."

The US dollar fell against most of the major currencies overnight, with commodity currencies, such as the Australian dollar, performing particularly well.

"This highlights the fickle nature of this event and the ongoing uncertainty of just how this plays out. So keep watching," Ms Lawson said.

Currency snapshot at 7am AEST Thursday:

One Australian dollar buys:

• 73.76 US cents, from 72.62 cents on Wednesday
• 91.62 Japanese yen, from 90.61 yen
• 66.11 euro cents, from 65.53 euro cents
• 111.42 New Zealand cents, from 111.24 NZ cents
• 47.25 British pence, from 46.62 pence

(Currency closes taken at 1700 AEST previous local session)

Source: IRESS