Valin Posted August 12, 2015 Share Posted August 12, 2015 CNN Money: Charles Riley Aug 12 2015 China's central bank allowed the yuan to drop sharply against the U.S. dollar again on Wednesday, sparking the currency's largest two-day decline in decades. The move comes one day after the People's Bank of China shocked markets by changing the way the yuan's daily trading band is calculated, and executing a one-time devaluation of the currency. The PBOC sets a daily midpoint for the yuan, around which the currency is allowed to trade within a 2% band. Until Tuesday, the central bank had total control over where the midpoint was set. Going forward, the midpoint will be based on the previous day's closing price. In a sign that China is following through on its plan, the central bank set the yuan's midpoint at 6.3306 on Wednesday -- 1.6% weaker than the previous day's midpoint, but near where the currency last traded. That follows a 1.9% devaluation of the yuan on Tuesday, a move that set off a major sell off on Wall Street. The PBOC, in a statement issued Wednesday, said it would work to keep the exchange rate "basically stable" and that there was "no basis" to believe the yuan would "persistently depreciate." Even with the central bank's reassurances, the yuan traded as much as 1.9% lower against the dollar on Wednesday. The currency mounted a mild recovery during late afternoon trade. The Wall Street Journal reported that the central bank had intervened, and instructed state-owned banks to sell dollars in an effort to stop the slide. (Snip) Link to comment Share on other sites More sharing options...
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