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China's central bank weakens yuan to 5-year low
27
Jun '16
The People's Bank of China (PBoC), the country's central bank, has weakened the currency by adjusting the most since last August. The bank has set the reference rate 0.91 per cent weaker at 6.6375 a dollar, a five-and-half-year low.

This is the largest fall since the PBoC devalued yuan by nearly five per cent over a week last year.

Post June 27, 2016 fix, the yuan is now at its lowest level since December 23, 2010.

The renminbi adjustment has come in the midst of dollar's surge due to global market turmoil following UK's vote to leave the 28-member EU. Both the British pound and the euro have tumbled post the UK referendum.

In recent months, PBoC has adopted a predictable policy and it only allows the yuan to rise or fall two per cent on either side of the daily fix.

Last week, PBoC governor Zhou Xiaochuan said that a more flexible yuan is vital for China's development and reforms, and hence, the monetary policy will be adjusted “in a dynamic way” to meet those goals.

Analysts expect the yuan to depreciate to 6.7 per dollar in the coming months, as non-dollar currencies continue to weaken following the June 24 referendum. (RKS)

Fibre2Fashion News Desk – India

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