The big story in markets on Tuesday is news out overnight that China devalued its currency.

The move put the midpoint of the yuan's peg against the dollar about 2% below where it had been in an attempt to give the country's flagging economy a boost.

On Tuesday, the move was having a big impact on some of China's biggest trading partners, including Australia and New Zealand, but in a note to clients on Tuesday, analysts at Morgan Stanley outlined how this move could affect a wide number of currencies across emerging economies, particularly in Asia.

For Asian currencies, excluding Japan, Morgan Stanley writes, "the major victims of the above policy changes in China are countries with high export exposure and export competitiveness with China which are coincidentally also suffering from issues of disinflation and overcapacity. Korea, Taiwan, Singapore, and to a lesser extent Thailand all fit into this category."

Outside China's direct partners in Asia, the impact across emerging currencies is less clear to Morgan Stanley, as countries with more rates exposure to the US could see benefits if pressure is eased off Treasury yields as a result of the yuan's devaluation.

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