The Chinese yuan is sliding again, continuing the two-week drop against the US dollar. It appears that Chinese officials are intervening, bringing the yuan’s value down after letting gain slowly but steadily against the greenback for years.
With economic news in China pointing to slower growth, it looks as though Chinese officials are ready to step in and remind everyone in the world who controls the value of the yuan (also called the renminbi). For the last two weeks, the yuan has been losing value against the US dollar, and earlier today the yuan dropped by 0.9 per cent, bringing the slide on the week to 1.2 per cent. The drop represents the biggest slide by the yuan against the dollar in about 20 years.
According to sources, the People’s Bank of China stepped in, selling the yuan while buying the US dollar. In recent years, the yuan has either gained against the dollar, or held steady. This long, steady decline is quite unusual. Even in the offshore markets, the yuan was being sold in favor of the dollar.
There are hopes that at some point the yuan will normalize and float more freely on the market, and there is also speculation that, at some point, after that happens, the yuan will overtake the dollar as the world’s de facto reserve currency. For now, though, the yuan closed its day near 6.1450 against the US dollar.
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