According to various reports, the People's Bank of China allowed the yuan to depreciate by nearly 2% against the U.S. dollar on Tuesday, due to a surprise policy change that shook international currency markets.
Central Bank devalues yuan in shocking move
The central bank said it had decided to allow market forces greater control over the yuan.
China's stock market has been struggling over the past few months.
According to CNN Money, the central bank said it had decided to allow market forces greater control over the yuan, and announced a major change in how the currency's daily "fix" or "midpoint" will be calculated.
The sudden devaluation is the largest ever in the past two decades, and comes amidst a recent drag in the country’s economic growth and increased stock market volatility. The move was announced before the market opened on Tuesday and it quickly rippled through global currency markets, raising questions over Beijing's timing and intentions.
The PBOC typically sets a daily midpoint for the yuan, around which the currency is allowed to trade within a 2% band. Until now, 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.
ADVERTISEMENT
"[Because] China is maintaining a relatively large trade surplus, [the yuan's] real effective exchange rate is relatively strong, which is not entirely consistent with market expectations," the bank said in a statement, according to CNN Money.
JOIN OUR PULSE COMMUNITY!
ADVERTISEMENT
Eyewitness? Submit your stories now via social or:
Email: eyewitness@pulse.ng
Recommended articles
Forgive me my papa - Self-acclaimed Hausa traditional ruler kneels to beg Oba of Benin
Fubara grows Rivers IGR by over 100%, less than 1 year after Wike's tenure
Plateau University suspends exams over killing of student
Nigeria laughing stock of the rest of the world due to insecurity - TY Danjuma
APC group claims Tinubu’s initiatives stimulating economic recovery
Plateau Gov urges calm after attack that led to death of 200-level PLASU student
NAFDAC reopens popular Ibadan supermarket shut for selling unregistered product
Gov Adeleke lavished with praise for providing water, sanitation facilities
CSO inaugurates campaign to combat electoral irregularities, promote reforms
Pulse Sports
Lionel Messi's son breaks the internet after scoring five goals for Inter Miami
Naija Stars Abroad: Onyedika, Boniface, and Osimhen shine across Europe
Victor Osimhen and Tobi Amusan make list of Forbes’ 30 under 30 Class of 2024
ADVERTISEMENT