The Australian dollar plunged more than 1 per cent on Tuesday when China devalued the yuan after more than a year of steady appreciation against its main trading partners, including Australia.

In late local trade, the Aussie was fetching US73.17¢, compared with US73.95¢ at the same time on Monday, and an intraday high of US74.36¢.

The Australian dollar fell below US71 cents on Tuesday Credit:Ian Waldie

The local dollar had hit an intraday low of US73.06¢ immediately after the People's Bank of China reset the yuan down 1.86 per cent against the US dollar, with which it has a managed peg.

The Chinese currency over the past 12 months has appreciated by almost the same as the greenback, which has climbed 15 per cent on a trade-weighted basis.