Yuan weakens 3.4% in July

By China Daily: Hong Kong Edition

In this Aug 11, 2015 photo, a worker counts Chinese currency renminbi (RMB) at a bank in Linyi, East China’s Shandong province.

BEIJING – China’s yuan weakened more than 3 percent against a basket of currencies in July, according to a China Foreign Exchange Trade System (CFETS) index.

The CFETS RMB Index, which measures the yuan’s strength relative to a basket of currencies, came in at 92.41 at the end of July, a 3.4 percent decline from a month ago, CFETS said.

The index compares the yuan to the value of 24 currencies, including the US dollar, euro and Japanese yen, which was expanded from a basket of 13 currencies in 2016.

In July, an index that measures the yuan against the Bank for International Settlements currency basket went down 3.36 percent to 95.67, while against the Special Drawing Rights basket it weakened 3.33 percent to 92.7, according to CFETS.

China’s central bank announced Friday that it would raise the reserve requirement ratio from zero to 20 percent for financial institutions trading foreign exchange forward contracts from Monday.

As part of the macro-prudential policy framework, the move is a response to recent pro-cyclical fluctuations in the forex market and aims to forestall macro-financial risk, the People’s Bank of China said.

The central bank said it would “enhance monitoring and make counter-cyclical adjustments in accordance with the development of the situation to keep the forex market steady and the yuan’s exchange rate basically stable at a reasonable and balanced level.”

This article provided by NewsEdge.