The renminbi extended its slide on Tuesday after China’s central bank lowered the midpoint around which the currency can trade against the US dollar by the most since January.
The decline followed the Chinese currency’s worst day in three months on Monday after the People’s Bank of China on Friday dropped a requirement raising the cost of betting on renminbi depreciation, and scrapped a requirement that banks hold reserves against renminbi deposits held in Hong Kong and other offshore centres.
On Tuesday, the PBoC set the daily fix — the midpoint around which the renminbi can trade 2 per cent in either direction against the dollar — at Rmb6.5277, which was 0.4 per cent softer than the previous day and the most significant weakening since January 9.
That prompted the onshore exchange rate for the renminbi to weaken as much as 0.3 per cent to Rmb6.548 against the dollar, bringing it down a cumulative 1.7 per cent from Friday’s peak.
The offshore rate, which is not bound by the PBoC band, eased as much as 0.2 per cent to Rmb6.5518 per dollar.