The renminbi slipped to a fresh four-year low against the US dollar in its first day of onshore trading since the People’s Bank of China said it would measure the exchange rate against a broader basket of currencies.
China’s central bank introduced the trade-weighted basket, in which the dollar accounts for 26.4 per cent and the euro 21.4 per cent, late on Friday. The offshore renminbi promptly dropped 0.5 per cent in London trading, pushing the currency to Rmb6.5577 against the dollar, a four-year low.
The PBoC’s management of the renminbi has been under scrutiny since August, when a botched 3 per cent devaluation sent shockwaves through world markets and prompted the Federal Reserve to hold off on an expected increase in US interest rates in September.