(Bloomberg) — The yuan dropped the most in two decades, sparking a tumble in Asian currencies after China devalued its exchange rate to combat an economic slowdown. Commodities fell, while Hong Kong shares and Treasuries gained.

The yuan dropped 1.4 percent to 6.2980 per dollar as of 11:12 a.m. in Hong Kong, after the central bank cut its reference rate by a record and said market forces will play a greater role. It was the biggest one-day loss since China unified official and market exchange rates in 1994. The Bloomberg JPMorgan Asia Dollar Index sank to the lowest level since 2009, while a gauge of commodities lost 0.7 percent. Yields on 10-year Treasuries dropped 5 basis points. The Hang Seng China Enterprises Index advanced 1.2 percent.

China’s devaluation follows economic reports this month showing a plunge in exports, weaker-than-estimated manufacturing and slowing credit growth. Policy makers in the biggest emerging market are trying to balance calls for economic stimulus against their long-term goals of increasing the role of markets and cutting back on debt-fueled investment.

“Policy makers and the central bank are still very concerned about the overall economic-growth momentum,” said Qian Wang, Hong Kong-based senior economist for Asia Pacific at Vangaurd Group Inc. “China has suffered because of the strengthening of the currency.”

One-Time Move

The People’s Bank of China cut its daily reference rate for the currency by a record 1.9 percent. The change was a one-time adjustment, the central bank said in a statement, adding that it plans to keep the yuan stable at a “reasonable” level and will strengthen the market’s role in determining the fixing.

The currency’s closing levels in Shanghai were restricted to 6.2096 or 6.2097 versus the dollar for more than a week through Monday and daily moves has been a maximum 0.01 percent for a month. The devaluation triggered declines of at least 1 percent in the currencies of Australia, South Korea and Singapore. The yuan slid 1.6 percent in offshore trading in Hong Kong.

The MSCI Asia Pacific Index dropped 0.3 percent, while futures on the Standard & Poor’s 500 Index declined 0.4 percent. The Shanghai Composite Index decreased 0.5 percent as airlines sank on concern a weaker yuan will increase the burden of their dollar-denominated debt and hurt earnings.

The Bloomberg Commodity Index lost 0.6 percent after surging 2.4 percent Monday. Gold for immediate delivery retreated 0.4 percent to $1,100.20 an ounce Tuesday, while silver, platinum and palladium also weakened. Copper dropped 0.8 percent in London.

“If the Chinese currency is going lower, then commodity prices go up for buyers in China — that’s the knee-jerk reaction,” said Helen Lau, an analyst at Argonaut Securities in Hong Kong.

Treasuries rose as the yuan’s retreat boosted the appeal of dollar-denominated assets. U.S. 10-year note yields fell to 2.18 percent, according to Bloomberg Bond Trader data.