Chinese yuan slumps to six-year low

Baku. 10 October. REPORT.AZ/ The People’s Bank of China set its daily reference rate for the yuan at 6.7008 against the U.S. dollar, a depreciation of 0.3% from its last fixing of 6.6778 on Sept. 30, before the National Day holiday. Monday’s fixing was the weakest level for the currency since September 2010. Report informs citing the Bloomberg.

Notably Chinese officials have repeatedly reiterated that there are no grounds for long-term depreciation of the yuan. At the same timeexchange rate formation mechanism reform will be done in exchange rate formation mechanism.

Notably, exchange rate in China prior to 2005 was at 8.3 CNY/USD rate. Later, appreciation was the reason for yuan to reach the level of 6 CNY/USD. Then, with the impact of the global financial crisis national currency of China started to weaken in August 2015. Over the past year, the PBC spent foreign exchange reserves to preserve the stability of the exchange rate.

The weakness in the yuan fix reflects data released during the past week, including a faster-than-expected drawdown of 18,79 billion USD in China's foreign currency reserves during September.

Analytical Group of Report expects exchange rate in China will gradually reduce and it will spread to all countries. Until 2020, the CNY/USD exchange rate is likely to reach again 8.3.