China continues to devalue its currency, hoping that a weak yuan will prevent economic catastrophe.
The People’s Bank of China (PBoC) weakened the yuan against the dollar for a third consecutive day on Thursday, following reports the central bank intervened to stem the currency’s sharp slide late on Wednesday.
The PBoC set the yuan fixing at 6.4010, compared to the previous day’s close of 6.3870, sending the currency to 6.40 per dollar in morning trade.
Thursday’s fix was 1.1 percent below Wednesday’s fix of 6.3306, a pause from the aggressive weaker fixings in recent days: On Tuesday the fix weakened 1.9 percent and then 1.6 percent on Wednesday.
Traders said Thursday’s slower pace of devaluation made sense following reports by the Wall Street Journal that the central bank asked state-owned lenders to sell dollars on its behalf in the last 15 minutes of U.S trading on Wednesday, which caused the yuan to rally 1 percent against the greenback after falling to fresh four-year lows in intraday trade.
Earlier on Wednesday, the PBoC warned it was not pursuing steady depreciation in response to allegations that Beijing was manipulating the currency to boost exports.
The central bank has yet to confirm the supportive action, but it is broadly being treated as fact by market insiders.
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