In its bid to support the
economy, which will allow the Yuan to match 2015 record decline of 4.5 percent
policy, China’s central bank has announced its willingness to let the Yuan fall
6.8 per dollar.
The yuan is already trading
at its lowest level in more than five years, so the central bank will aim to
ensure a gradual decline for fear of triggering capital outflows and criticism
from trading partners such as the United States, said government economists and
advisers involved in regular policy discussions.
Presumptive U.S. Republican
Presidential nominee Donald Trump already has China in his sights, saying on
Wednesday he would label China a currency manipulator if elected in November.
Investors keep a close watch
when the yuan is in decline. A surprise devaluation of the yuan last August
sent global markets into a spin on worries the world's second-biggest economy
was in worst shape than Beijing had let on, prompting massive capital outflows
as investors sought safe havens overseas.
"The central bank is
willing to see yuan depreciation, as long as depreciation expectations are
under control," said a government economist, who requested anonymity due
to the sensitivity of the matter.
"The Brexit vote was a
big shock. The market volatility may last for some time."
Other emerging market
currencies have also fallen in the wake of Britain's vote to leave the European
Union, but the yuan is the weakest major Asian currency against the dollar this
year.
The currency CNY=CFXS fell
as low as 6.6549 per dollar following the Reuters report, near a 5-1/2 year
intraday low on Monday. State-owned banks were suspected of intervening to sell
dollars, currency traders said.
At the low, the yuan had fallen
about 2.4 percent this year.
After the report, the
People's Bank of China, the central bank, said China had no intention to
promote trade competitiveness through depreciation of the yuan, a comment that
has also been made repeatedly by Chinese Premier Li Keqiang.
Without citing any media by
name, it said on its website that some media continuously published
"inaccurate information" on the yuan's exchange rate. These reports
interrupt the normal operation of the market and help "speculative forces"
short - or bet against - the yuan, it said.
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