China in red, yuan at lows. What happens to the dragon?

Bad session for China today: the yuan collapses and the dragon's shares slide, dragging Asian markets lower.
The US stock rally, stimulated by a surprise rate cut in Switzerland that made investors bet on a large-scale easing of monetary policy, then faded in Asia.
The yen and yuan were the protagonists of the session and fell into the trap of the dollar's recovery.
The expected decline in the greenback is slow in arriving and this causes movements in Forex that are unfavorable to other national currencies.
The dollar appreciated against nearly all G10 currencies and some in emerging Asia, as an unexpected rate cut by the Swiss National Bank on Thursday spurred speculation that other major central banks will cut their policy rates faster than the Fed ones.
Furthermore, China still grappling with a full economic recovery has added shadows to Asian stock markets today.
China sends Asia into the red today: the reasons Chinese stocks led the declines in Asia.
China's CSI 300 Index fell 1.6%, on pace for its largest daily decline since January, and the Hang Seng Tech Index closed down 2%.
The Chinese yuan weakened to four-month lows and surpassed the 7.2 per dollar level.
The plunge prompted the country's major state banks to sell dollars for yuan in a bid to slow the decline, sources told Reuters.
The yuan has come under pressure from rising market expectations that Beijing needs further stimulus to stabilize the world's second-largest economy, and from a weaker yen.
read also China's plan to reshape world trade (on its own terms) The PBOC faces the difficult task of trying to stimulate China's fragile economy through monetary easing, keeping the yuan relatively stable and preventing capital outflows.
The yuan's drop above 7.20 came after PBOC deputy governor Xuan Changneng said on Thursday that China still has room to lower the reserve requirement ratio for banks and increase liquidity.
“Sentiment (is) very fragile today,” said Wong Kok Hoong, head of equity sales at Maybank, citing, among other things, concerns about weak earnings at Chinese companies and continued problems in the dragon's real estate sector.
While some say a proposed law in the United States aimed at limiting mutual fund investments in certain products that track Chinese stocks may have hurt sentiment, others say it was time for the stock rally in China to pause.