The Chinese yuan lost ground against the U.S. dollar in Asian trading on Thursday, as the People’s Bank of China set a weaker reference rate for the yuan exchange rate, tumbling equities and forcing a trading halt in Chinese markets.
The Chinese central bank fixed today’s central parity rate of the yuan at 6.5646 per dollar, around 0.50 percent weaker than yesterday’s reference rate of 6.5314. Today’s fixing was the weakest since August, 2015, when the central bank rattled markets on fears over a currency war. The central banks sets the reference rate every morning and allows the currency to fluctuate upto 2 percent from that level.
Trading in Chinese shares was suspended for the second time this week, after Shanghai Composite Index fell 7.3 percent, triggering a newly launched circuit breaker that became effective Monday.
The yuan slipped to 6.6009 against the greenback, its lowest since February 2011. At Wednesday’s close, the pair was worth 6.5545. The yuan is likely to find downside target around the 6.63 zone.
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