Chinese yuan fix drops to a six-year low

AFP, SHANGHAI: China’s central bank set the yuan’s central parity rate weaker than 6.7 to the dollar for the first time in six years yesterday, the first day of trading after it joined the IMF’s “special drawing rights” reserve currency basket.
The currency has been declining for months in the face of a globally stronger dollar, slowing growth in the Chinese economy, and capital outflows from the world’s second-largest economy.
China’s Communist authorities have repeatedly pledged to liberalise trading in the unit, also known as the renminbi, but still keep a tight rein on it, only allowing it to rise or fall two per cent on either side of a daily fix on the national foreign exchange market.
On Monday the People’s Bank of China lowered the central rate by 230 basis points from the previous trading day to 6.7008, its weakest since 2010.
Chinese markets were closed all last week for national holidays, during which the dollar’s performance was “quite strong”, Lu Zhengwei, chief economist at Industrial Bank told AFP.
“I believe today’s slump is a response to the strong dollar during the holiday.” 
Monday was the first trading day in China since the yuan joined the dollar, pound, yen and euro in the IMF’s “special drawing rights” reserve currency basket on October 1, after a decision last year.
The move, long pressed for by Beijing as it seeks to increase the yuan’s role in global markets, brings with it symbolic prestige but has limited direct impact, analysts say.

Chinese yuan fix drops to a six-year low

AFP, SHANGHAI: Chinas central bank set the yuans central parity rate weaker than 6.7 to the dollar for the first time in six years yesterday, the first day of trading after it joined the IMFs special drawing rights reserve currency basket. The currency has been declining for months in the face of a globally stronger dollar, slowing growth in the Chinese economy, and capital outflows from the worlds second-largest economy. Chinas Communist authorities have repeatedly pledged to liberalise trading in the unit, also known as the renminbi, but still keep a tight rein on it, only allowing it to rise or fall two per cent on either side of a daily fix on the national foreign exchange market. On Monday the Peoples Bank of China lowered the central rate by 230 basis points from the previous trading day to 6.7008, its weakest since 2010. Chinese markets were closed all last week for national holidays, during which the dollars performance was quite strong, Lu Zhengwei, chief economist at Industrial Bank told AFP. I believe todays slump is a response to the strong dollar during the holiday. Monday was the first trading day in China since the yuan joined the dollar, pound, yen and euro in the IMFs special drawing rights reserve currency basket on October 1, after a decision last year. The move, long pressed for by Beijing as it seeks to increase the yuans role in global markets, bringswith it symbolic prestige buthas limited direct impact, analysts say.