FOREX-Yuan pulls off lows, yen slumps as China tussles with U.S. over currency policy

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Offshore yuan rebounds from all-time low in Asia
* U.S. brands China a currency manipulator
* U.S.-China trade war enters uncharted territory
* China let onshore yuan fall to 11-year low Monday

(Adds details on yen, RBA)
By Stanley White
TOKYO, Aug 6 (Reuters) - The offshore yuan managed to come
off an all-time low on Tuesday after Beijing appeared to take
steps to prevent the currency from sliding further, following a
sharp drop that prompted the U.S. government to label China a
currency manipulator.
The yen slumped against major currencies as China's response
in the trade war forced speculators to give up short-term bets
that risk aversion would push the Japanese currency higher.
Yet, highlighting the shakeout in asset markets after
Monday's rapid escalation in tensions pushed the U.S.-China
trade war into uncharted territory, the dollar index .DXY
against its main rivals also remained on the backfoot.
On Monday, China let the onshore yuan break through the key
7 per dollar level for the first time since the global financial
crisis, sending global financial markets into a tailspin, and
investors are closely watching to see how much more Beijing will
allow it to fall. China said early on Tuesday it was selling yuan-denominated
bills in Hong Kong, in a move seen as curtailing short selling
of the currency. It also set a daily mid-point for onshore trade that was
slightly firmer than markets had expected, though it was still
the weakest level since May 2008.
U.S. Treasury Secretary Steven Mnuchin said in a statement
on Monday the government had determined that China is
manipulating its currency and that Washington would engage with
the International Monetary Fund to eliminate unfair competition
from Beijing.
Yuan's sudden drop through the 7 mark came days after
President Donald Trump announced he would impose 10% tariffs on
$300 billion of Chinese imports, ending a month-long trade
truce. "The recovery in yuan and the move in the yen is triggered
by the fixing, which has eased some concern about competitive
currency devaluation," said Masafumi Yamamoto, chief currency
strategist at Mizuho Securities in Tokyo.
"China is not really trying to dramatically weaken its
currency. However, nothing has been resolved in the trade war."
The offshore yuan CNH=D3 initially fell to 7.1265 per
dollar, the lowest since international trading in the currency
began in 2010, but then rallied around 0.5% against the dollar
to 7.0623.
The onshore yuan CNY=CFXS opened trade at 7.0699 per
dollar and was last at 7.0370, versus its last close at 7.0498.
In volatile trading, the dollar initially fell versus the
yen JPY=EBS to 105.51 yen, the lowest since a flash crash in
January that roiled currency markets, but then reversed course
and surged by 1% to 107.11 yen as 10-year Treasury yields and
U.S. stock futures turned positive.
The yen, which usually rises during times of economic stress
and market turmoil due to Japan's status as the world's biggest
creditor, also slumped against major crosses after the latest
moves from Beijing.
The New Zealand dollar NZDJPY= surged 1% to 69.85 yen,
while the Australian dollar rose 1.2% to 72.42 yen.
Elsewhere, the Australian dollar AUD=D3 rose 0.3% to
$0.6778. The Aussie held onto gains after the Reserve Bank of
Australia left its benchmark interest rate at a record low of
1.00%, as expected. The New Zealand dollar NZD=D3 jumped by 0.5% to $0.6562
after New Zealand's jobless rate fell to an 11-year low, but the
kiwi later erased its gains to trade flat on the day.
The Reserve Bank of New Zealand is expected to cut interest
rates to a record low of 1.25% on Wednesday, but strong
unemployment data suggests the economic is not as bad as some
had speculated. = 7.0508 Chinese yuan renminbi)