A man walks past a currency exchange shop in Hong Kong, Tuesday, August 11, 2015. China devalued its tightly controlled currency Tuesday following a slump in trade, allowing the yuan’s biggest one-day decline in a decade. AP
SHANGHAI, China – China cut the value of the yuan against the dollar for a second consecutive day Wednesday, trimming the reference rate by 1.62 percent, the central bank said.
The daily fix that sets the value of the Chinese currency against the greenback was lowered to 6.3306 yuan, from 6.2298 on Tuesday, the People’s Bank of China (PBoC) said in a statement on its website, a day after the unit was devalued by nearly two percent.
Tuesday’s devaluation — the biggest since 2005 when China unpegged the yuan, also known as the renminbi (RMB) from the dollar — raised worries over the health of the world’s second-largest economy.
The action was widely viewed as way to help boost exports by making them more competitive as economic growth slows, although China’s central bank described it as a one-off move to reform its exchange rate system.
Previously, Chinese authorities based the fixing on a poll of market-makers, but the PBoC said Tuesday they will now also take into account the previous day’s close, foreign exchange supply and demand and the rates of major currencies.
Wednesday’s fix was even lower than Tuesday’s close of 6.3232 yuan to the dollar.
Chinese authorities maintain strict controls on the currency, allowing it to trade only within a two percent range of the daily reference rate.
SG Global Economics said in a research report that depreciation “should help the struggling Chinese economy”.
“Although the PBoC referred to the move as a one-off, (we) now see the bias for further depreciation,” it said.
China is also seeking to reform its yuan policy in an effort to have it included in the International Monetary Fund’s basket of “special drawing rights” (SDR) reserve currencies.