Chinese Yuan Continues to Weaken against USD

The Chinese yuan continued to weaken on Tuesday, with the fix breaking its six-year low against the US dollar for a third trading day.

    The central parity rate of the Chinese currency renminbi, or the yuan, weakened 54 basis points to 6.7744 against the US dollar, according to the China Foreign Exchange Trading System. It was the weakest level since September 2010 as increased market expectations for an interest rate hike in the United States led to a stronger dollar, according to China's (Xinhua) News Agency. 

    But the depreciation markedly narrowed from 132 and 247 basis points on Monday and Friday, respectively. "There's no basis for persistent depreciation of the yuan," deputy governor of the People's Bank of China Yi Gang said.  Yi said China's sound economic fundamentals will help the currency remain stable around a reasonable level. 

    In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2% from the central parity rate each trading day.The central parity rate of the yuan against the US dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.