Chinese currency keeps slipping against dollar
Beijing: China’s currency fell for the third straight day on Wednesday to its weakest rate against the dollar in more than four and a half years.
The yuan, also known as the renminbi, dropped 31 basis points to 6.4895 against the US dollar on Wednesday, its weakest since June 2011, according to data from the China Foreign Exchange Trading System. Wednesday’s dip followed Tuesday’s 114-point drop to 6.4864, also the lowest in 54 months.
The US dollar gained against other major currencies on Tuesday, state media reported.
China’s central bank still sets the daily exchange rate, permitting the yuan to fluctuate a maximum 2 per cent either way on each trading day.
This year the yuan is down around 5 per cent against the dollar and most analysts agree it will only keep on sliding in line with official Beijing policy. Last year, the central bank doubled the trading band. In August, Beijing announced a sudden 2 per cent devaluation after more than a decade of US complaints that the yuan was being pegged artificially low.
Most analysts interpret the slow, managed long-term decline of the yuan as an attempt to boost the country’s exports and combat the risk of a serious downturn in the world’s second-largest economy.
President Xi Jinping last month set China’s minimum annual growth target at 6.5 per cent for the next five years. Although the economy grew 6.9 per cent year-on-year in the third quarter of 2015, the rate of growth has fallen sharply over the last few years amid concerns that banks are masking liabilities. China is also working to win acceptance for its currency as a global player in trade and investment, supporting the widespread view that Beijing’s ultimate goal is for the yuan to supplant the dollar as the world reserve currency.
In November, the IMF agreed to include the yuan in an exclusive basket of currencies starting on October 1, 2016. — dpa