Currency investors sought the security of the yen over higher-risk plays like the Australian and New Zealand dollars on Tuesday, judging a second day of stability for the yuan was not the end of a depreciation that has hit global markets.

With attention firmly fixed on China and a fall in oil prices to $30 a barrel, the euro and Swiss franc both gained around a third of a per cent against the dollar, while the Aussie and kiwi fell half a per cent.

Yuan offshore rates

Yuan offshore rates were little changed, having earlier converged with the officially controlled onshore market following moves by Beijing to drive implied overnight interest rates in Hong Kong to as high as 94 per cent.

Fund investors, bankers and corporate sellers have rounded on the yuan since late December and it has taken action by Beijing described by some dealers as “nuclear’’ to stabilise the currency.

Chris Morrison, head of strategy with London-based hedge fund Omni, has been betting against the yuan since the start of 2014.

“The interest in this trade has just risen exponentially. I have received 50 emails per day on the RMB (yuan) in the last week,’’ he said.

“We saw that as a short-term reason to reduce our position size. There will be a consolidation...But we remain very committed to the trade.’’

Several banks have cut their forecasts for the yuan to around 7 per dollar by the end of this year, compared with 6.58 on Tuesday.

“It’s rather contingent on the dollar staying big but a 5-10 per cent depreciation per year for two or three years seems entirely possible,’’ said Richard Benson, co-head of portfolio investment with currency managers Millennium Global in London.

Crude oil

A fall in oil prices to $30 a barrel also hammered the currencies of producers, driving the Canadian dollar to a 13-year low of C$1.4250 per US dollar and the Norwegian crown to a 13-month low of 9.6925 per euro.

Crude oil futures have fallen almost 20 per cent since the beginning of the year, and both US crude and global benchmark Brent were down around 2 per cent on Tuesday.

The dollar slipped about 0.3 per cent to 117.47 yen, after plumbing a low of 116.70 on Monday, its weakest since August 24. The euro added about 0.2 per cent to $1.0876.

“Interest rate differentials don”t mean anything at the moment. Risk sentiment, oil prices, and China — people are just focusing on that now,’’ said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo.

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