The central parity rate of the Chinese currency renminbi, or the yuan, strengthened 108 basis points to 6.3505 against the USA dollar on Thursday, according to the China Foreign Exchange Trading System.
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China’s foreign exchange reserves continued to decline in September, falling by $43.3 billion to $3.514 trillion, according to data released by the PBOC today.
In August, the PBOC reported reserve assets declined US$93.9 billion, the biggest monthly fall in history, refuelling concerns over capital outflows and a hard-landing of the economy.
Analysts said the smaller decline in reserves last month indicates that pressure is easing somewhat on the currency.
Steve Wang, chief China economist at Reorient Financial Markets, held a more bearish view and forecast the September reserve to come close to US$3.4 trillion.
Yi termed the devaluation “just a slight change” of the central policy rate for the yuan and said it would continue to “head to a more market-oriented regime”.
“China has been trying to converge the rates in both the onshore and offshore markets”, said Mr Khoon Goh, a senior strategist at Australia & New Zealand Banking Group in Singapore. Chinese policymakers have told Reuters that Beijing was so shocked by the worldwide reaction to the yuan’s drop that they had shelved plans for further adjustments.
The yuan hit the strongest level since its recent devaluation amid the central bank’s robust fixing and improved market sentiment.
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“I think their strategy to bring that about is to stablilise the spot rate, intervene in the offshore and the onshore spot markets and hope that the economic data kind of portrays a recovering economy and confidence comes back a bit more”, he said.
