Chinese yuan weakens to six-year low against USD

Chinese yuan weakens to six-year low against USD

Beijing, Oct 10 (IANS) The central parity rate of the Chinese currency renminbi, or the yuan, weakened 230 basis points to 6.7008 against the US dollar on Monday, the China Foreign Exchange Trade System (CFETS) said.

It was the weakest level since September 2010 as increased market expectations for an interest rate hike in the US led to a stronger dollar, Xinhua news agency reported.

In September, the yuan exchange rate composite index, which measures the yuan’s strength relative to a basket of currencies including the US dollar, euro and Japanese yen, weakened by 0.28 per cent month on month to 94.07, CFETS data showed.

During the same period, the index that measures the yuan against the Bank for International Settlements currency basket weakened by 0.31 per cent month on month to 94.75, while that against the Special Drawing Rights basket weakened by 0.06 per cent to 95.05, according to the CFETS.

In China’s spot foreign exchange market, the yuan is allowed to rise or fall by 2 per cent from the central parity rate each trading day.

The central parity rate of the yuan against the US dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.

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