Last week, the main news on financial markets was depreciation of the Chinese currency. On Tuesday, 11 August, the People’s Bank of China revised the reference rate of the Yuan 1.9% downwards, which has not happened since 1994. The People’s Bank of China (PBC) promised that, further on, its reference rate would be determined with due consideration for the value registered at the closing time of the previous session at an open market. In the course of the day, the Yuan quotations in trading can deviate from the reference rate no more than 2% in any direction.
After the record-low depreciation on Tuesday, the Yuan exchange rate depreciated 1.8% at market trading, which is a record-low over the last twenty years, and then fell another 2% on Wednesday. On Wednesday, the PBC established the official exchange rate of the Yuan 1.6% below the level announced by the central bank as of 11 August. That is, the central bank took into account the direction of changes on the market, but did not reflect the scale of changes in full.
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