LONDON (Reuters) – Citi recommended de-risking emerging market portfolios after the Chinese yuan crashed through the 7 to the dollar threshold on Monday, with the bank saying it expected reverberations across higher-yielding assets of developing economies.

“The PBOC [People’s Bank of China] is stepping in unchartered territory,” said Citi head of CEEMEA strategy Luis Costa, adding the move by the Chinese central bank to allow the currency to weaken could only be attributed to an intended response to the White House’s decision to hike tariffs.

This could have a ripple effect on investors impetus to stay on high-yield carry positions, said Costa, adding it was time to take profit on long positions in Turkish lira vs South African rand as well as Ukraine GDP warrants and paid South African rand 5y5y versus 5y5y U.S. dollar.

“It is indeed an important decision by the Chinese government, because they fully understand the unintended effects of an abruptly higher USDCNY and USDCNH. Further upside moves could shake up capital flows in China (acceleration of outflows) and global equity markets.”