US dollar & Chinese yuan bank notes
China has devalued the yuan to a near three-year low against the US dollar Reuters

Most Asian markets were trading lower on 11 August after China devalued the yuan against the US dollar in a surprise move.

The People's Bank of China (PBC) revised the currency's central parity rate by 1.9% to 6.2298 yuan per dollar – the lowest level in almost three years – from the previous 6.1162.

The move was a "one-time correction" to make the currency's value more dependent on market movements, the central bank said.

The surprise move came after official data revealed Chinese exports plunged 8.3% compared to a year ago in July, well below analysts' expectations of a 1.5% drop.

A weaker currency makes exports more competitive in foreign markets and pushes down borrowing costs.

The devaluation's effect spilled over to Australia, New Zealand, Singapore, Taiwan and South Korean as all the currencies eased more than 1% against the US dollar at mid-day.

"If the yuan is sliding then why not join in," Westpac senior currency strategist Sean Callow told CNBC.

"If China's a rival exporter, and all of a sudden it's allowing its currency to weaken, then you're more inclined to let your currency weaken."

Equities lose ground

Markets in the region also headed lower following the unexpected PBC announcement, with mainland China's Shanghai Composite index dropping 0.4% to 3,912.23 points.

Shares in Chinese electronics major Suning surged 10% in Shenzhen after online retailer Alibaba said it would invest CN¥28.3bn (£2.9bn, €4.1bn, $4.5bn) in the business.

Japan's Nikkei benchmark was down by 0.5% at 20,712.22 points, while South Korea's Kospi index fell by 0.8% to 1,986.65.

Hong Kong shares bucked the regional trend, however, with the Hang Seng index was up 0.8% at 24,708.37.

In Australia, the S&P/ASX 200 slipped 0.6% to 5,478.40.