Craigs Investment Partners broker Chris Timms said currency wars were not a new phenomenon but he believed the latest move by the China central bank was to shore up its economy after a run of poor economic data.
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They’ve also accused Beijing of unfairly boosting demand for its exports.
In an earlier statement, the PBOC said it will maintain a normal fluctuation of the yuan.
It has since lowered the central rate twice more, and the week’s combined drop is the biggest since China set up its modern foreign exchange system in 1994, when it devalued the yuan by 33 percent at a stroke.
Beijing said the move was the result of switching to a more market-oriented method of calculating the daily reference rate which sets the value of the yuan, also known as the renminbi (RMB).
But Zhang said there are no grounds for persistent and substantial depreciation as sound economic fundamentals determine that the yuan will re-enter a rising streak.
The central parity rate is now released before the opening of the interbank market each trading day, based on a weighted average of prices offered by market makers and referring to the closing price on the previous day.
Still, it was up 1.6 per cent on the week, as the dollar has been hit by speculation that the US too may not want a strong dollar if China pushes down the yuan.
The devaluation was engineered by Chinese authorities, and some analysts see it as a way to help China’s slowing economy by making its exports cheaper and therefore easier to sell overseas.
The Bank of Korea held interest rates on hold earlier Thursday, despite pressure to weaken the currency to stay competitive against China.
“Major state banks are suspected of buying yuan whenever it nears 6.4 per dollar”.
PBOC Governor Yi Gang said on Thursday that the central bank had already withdrawn from regular intervention but would implement effective management of the exchange rate in case of extreme currency volatility.
The cut, and two subsequent reductions, sent global financial markets into a tailspin as it raised questions over the health of the world’s second-largest economy and sparked fears of a possible currency war.
China has painted the sudden devaluation as a move created to give market forces more influence in setting the level of the yuan, increasing the likelihood that the worldwide Monetary Fund will include it in its basket of reserve currencies.
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This ended three days of falls for the currency since its surprise devaluation was first announced.
