The central parity rate of the Chinese currency renminbi, or the yuan, weakened on Monday, 81 pips to 6.8998 against the dollar, according to the China Foreign Exchange Trade System.
Africa Today News, New York reports that China’s spot foreign exchange market, the yuan was allowed to rise or fall by two percent from the central parity rate each trading day.
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The central parity rate of the yuan against the dollar was arrived at on a weighted average of prices offered by market makers before the opening of the interbank market each business day.
Liu Guoqiang, deputy governor of the People’s Bank of China (PBOC), said at a press conference on Monday that the yuan has shown more flexibility, and those two-way fluctuations over the short term are normal. But in the long run, he reassured, the yuan will maintain its strength as a global currency.
The onshore yuan exchange rate set a two-year low in the midday trading session, and it triggered market speculation of a potential weakening to 7 against the US dollar – a key psychological level in the foreign exchange market.
‘It is hard to speculate on a certain point in the exchange rate. The market should not bet on a specific level [in the yuan’s exchange rate],’ Liu said. ‘We’d like to see a reasonably balanced and basically stable exchange rate.
‘We don’t see one-sided depreciation. We have the strength to support the currency. I don’t think anything [disastrous] will happen, and we will not allow it to happen.’
Analysts said the yuan’s weakness has been further pressured by the dollar’s broad strength in global markets and a resurgence of coronavirus infections across the country.