No long-term yuan devaluation
The central parity rate of the yuan once again weakened on Monday, falling 222 basis points to 6.7379 against the US dollar, a six-year low. This came after a 139 basis-point rise the previous trading day ended seven consecutive days of declining.
The yuan's decline against the US dollar is a result of the market mechanism in recent days. The high volatility of major currencies such as the British pound against the US dollar since the beginning of October has led to a stronger dollar index, thus causing the yuan to fluctuate after the National Day holiday during which its exchange rate remained unchanged.
The yuan's recent inclusion in the International Monetary Fund's Special Drawing Rights basket of currencies, which means its exchange rate will more reflect market factors, demands as little intervention as possible from China's monetary authorities.
