China weakens yuan’s fixing almost 1%

Asian giant deliberately reduced value of currency as a result of Brexit

SHANGHAI: 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% from Friday’s fixing, according to data from the Foreign Exchange Trade System.

It was the largest fall since 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.

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.

Published in The Express Tribune, June 28^th, 2016.

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