PBoC devalues RMB reference rate by record 1.9% as exports slump

~~BEIJING – China’s central bank, the People’s Bank of China (PBoC), has weakened the yuan’s daily reference rate by 1.9%, devaluing the currency at a record rate in order to stave off the effects of slumping exports. Bloomberg reported that the currency dropped an unprecedented 1.2% to 6.2848 per USD as of Tuesday morning.

In a statement, the PBoC called the move a “one-time adjustment” that “will strengthen the market’s role in the fixing and promote the convergence of the onshore and offshore rates” The central bank added that the yuan’s effective exchange rate “is stronger than that of other currencies, which is a deviation from market expectations”. The PBoC had earlier commented that a strong yuan puts pressure on China’s exports.

Overseas shipments from China fell 8.3% year-on-year in July, a much more significant fall than predicted.

As China aims for its currency to be added to the International Monetary Fund’s Special Drawing Rights (SDR) basket of reserve currencies, it has kept the currency stable in an attempt to encourage greater global usage.

Today’s cut in the reference rate has triggered declines of more than 0.4% in the Australian dollar, South Korea’s won and the Singapore dollar. www.webershandwick.cn (ATI).