THE yuan yesterday weakened the most in two months on the spot market as the Chinese central bank lowered the central parity rate on rising concerns about a potential global currency war.
The People's Bank of China yesterday set the reference rate 0.04 percent weaker at 6.2816 per US dollar yesterday as trading resumed after the holiday break.
On the spot market, the yuan closed at 6.2427 per US dollar, 0.16 percent weaker from February 8 and recorded the biggest daily decline since December 14, according to data from the China Foreign Exchange Trade System. The yuan is allowed to trade 1 percent on each side of the reference rate.
The yuan weakened after the US dollar index, a gauge measuring the value of the greenback against major currencies, hit a six-week high yesterday as Japan voiced easing measures.
"Concerns appear to be growing about the potential for a so-called global currency war," said Alaistair Chan, an economist at Moody's Analytics.
"Such a war may increase protectionism if countries ease monetary policy aggressively in order to lower their currency value," Chan said.
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