The Chinese yuan weakened against the U.S. dollar in the Asian session on Wednesday, after China’s central bank cut its key interest rate.
The People’s Bank of China said in a statement on its website Tuesday that the interest rates were reduced by 0.25 percentage points each. The benchmark one-year lending rate was cut to 4.6 percent and the deposit rate was slashed to 1.75 percent. Further, the reserve requirements ration was reduced by 50 basis points for most big banks.
Against the greenback, the yuan fell to nearly a 2-week low of 6.4230 from an early high of 6.4010. At yesterday’s close, the yuan was trading at 6.4112 against the greenback.
If the yuan extends its downtrend, it is likely to find support around the 6.46 area.
The People Bank of China set today’s central parity rate for yuan at 6.4043 per dollar, compared to Tuesday’s reference rate of 6.3987. The central bank sets the reference rate every morning and allows the currency to move upto 2 percent from that level.
The material has been provided by InstaForex Company – www.instaforex.com