China cuts yuan fix in biggest move since devaluation

Shanghai: China's central bank on Wednesday fixed the yuan currency nearly 0.60 percent weaker against the US dollar, according to the national foreign exchange market, the biggest downward move since devaluing the unit in August last year.

The People's Bank of China set the value of the yuan -- also known at the renminbi (RMB) -- at 6.4943 to USD 1.0, weakening 0.59 percent from the fix of 6.4565 the previous day, according to data from the Foreign Exchange Trade System.

China only allows the yuan to rise or fall two percent on either side of the daily fix, one of the ways it maintains control over the currency.

Analysts said the weaker fix was in line with strength in the US dollar overnight, as financial authorities seek to make trading more market oriented.

The USD rose against most of its peers yesterday as global growth worries swept equity markets and pushed oil prices lower, boosting demand for the safe-haven US currency.

"To maintain a stable currency market, the RMB weakened accordingly," Liu Xuezhi, an analyst at the Bank of Communications, told AFP.

Today's cut came after China on Friday raised the yuan-dollar exchange rate by 0.56 percent from the previous day, the biggest increase in almost 11 years.

The world's second-largest economy rattled global investors with a surprise devaluation last August, when it guided the normally stable yuan down nearly five percent over a week.

At mid-morning today, the yuan was quoted at 6.4996 to the USD on the onshore market, weakening from yesterday's close of 6.4743, according to the Foreign Exchange Trade System.