China devalues yuan almost 1 percent as dollar surges

A Chinese woman poses for photos near a sculpture depicting a Chinese yuan note at an art district in Beijing, China. China again devalued its tightly controlled currency on Monday, June 27, 2016, as the dollar surged after Britain’s vote to leave the European Union. AP

SHANGHAI, China — China weakened the yuan’s fixing almost one percent to a five-and-half-year low against the dollar Monday, officials said, the biggest downward move since August as the greenback surge after Britain’s vote to leave the European Union.

The People’s Bank of China (PBoC) set the value of the yuan — also known as the renminbi — at 6.6375 to the greenback, down 0.91 percent from Friday’s fixing, according to data from the Foreign Exchange Trade System.

It was the largest fall since a surprise devaluation last year, when it guided the normally stable yuan down nearly five percent over a week, rattling global investors.

Monday’s fix was the lowest level since December 23, 2010.

READ: China devalues yuan at over five-year low against dollar | China cuts yuan rate again against US dollar

China only allows the yuan to rise or fall two percent on either side of the daily fix, one of the ways it maintains control over the currency.

The dollar surged Friday after Britain’s historic vote to withdraw from the EU sent shudders through world markets as investors fear it will hammer the global economy.

The PBoC said at the time that China had prepared a contingency plan for the British vote and would further improve the yuan rate system to keep the unit “basically stable”.

But analyst warned of more gyrations.

“There will be further volatility to come,” Khoon Goh, head of Asia research at Australia & New Zealand Banking Group in Singapore, told Bloomberg News before the reference rate was announced.

The onshore yuan was quoted at 6.6440 in morning trading on Monday, down 0.44 percent from Friday’s close of 6.6148, according to the Foreign Exchange Trade System.