Emerging markets at mercy of falling Yuan as currency war looms. Here's why

Asian currencies, including the South Korean won and Indonesian rupiah, have borne the brunt of the sell-off in emerging markets this month, with the yuan the worst performer after Turkey's lira

China’s yuan is back at the top of emerging-market investor worries as the deepening standoff between the U.S. and China over trade threatens to evolve into a currency battle.

As the dollar strengthens amid the trade tensions, the slide in the yuan is spurring concern that China might be embracing purposeful devaluation as a policy tool. That stoked the ire of U.S. President Donald Trump, who accused the country and the European Union of manipulating their currencies. The offshore yuan’s one-week implied volatility jumped to a five-month high.

“The yuan’s definitely weighing on risk, although much more so on Asia,” said Edwin