The renminbi has suffered its steepest weekly fall against the US dollar since China reformed its exchange rate system in 2005 in a move that some economists have interpreted as a warning from the country’s central bank to currency speculators.
The renminbi posted its seventh straight daily decline yesterday, sliding 0.02 per cent against the dollar to close at 6.1244 having hit its lowest level since early August in intraday trading.
One popular theory among economists and investors is that the People’s Bank of China engineered the depreciation because it was concerned about huge inflows of capital in recent months and wanted to show markets that trading the currency was not a one-way bet. Analysts had been forecasting a continuation of the appreciation seen since late 2012.