Yuan’s central parity rate weakens
Print Edition
THE central parity rate of the yuan weakened further by six basis points yesterday to 6.5790 against the US dollar, the lowest level since February 2011, according to the China Foreign Exchange Trading System.
The fall followed Monday’s drop of 294 basis points, which dragged the central parity rate of the yuan to its weakest point in more than five years.
The tumble came after US Federal Reserve Chair Janet Yellen said at Harvard University on Friday that an interest rate hike in the next few months would probably be appropriate if economic data improve. Her comments boosted the US dollar against other major currencies.
Despite the fluctuations, there remains only limited concern over the yuan’s depreciation pressure among market observers.
“China has allowed greater flexibility in the renminbi (yuan) exchange rate while maintaining its stability,” said a report issued by China International Capital Corp on Monday.
As the dollar moves, the yuan may show fluctuate more in the second and third quarters, but a large one-off devaluation is unlikely, CICC forecast.
The yuan is transiting from a highly managed regime to a floating one, said a HSBC report, which predicted that China would remain committed to foreign exchange reforms.
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