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Bloomberg
China weakened its currency fixing by the most since last August as global market turmoil spurred by Britain’s vote to leave the European Union sent the dollar surging.
The People’s Bank of China set the reference rate 0.9 percent weaker at 6.6375 a dollar. A gauge of the greenback’s strength jumped 2.4 percent in the past two days, the most since 2011, as the British pound and the euro tumbled. The yuan dropped 0.3 percent to 6.6473. in Shanghai, heading for its weakest close since December 2010.
The resurgence in the dollar is threatening to upend China’s dual strategy of allowing limited gains versus the greenback to combat capital outflows, and guiding depreciation against the currencies of trading partners, which helps exporters. The yuan has dropped almost 10 percent versus a basket of peers since its August peak.
“There is increased risk of outflows,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd. in Singapore, who is reviewing year-end forecasts for the yuan.
“Authorities could intervene to limit the extent of yuan weakness, as they have before and ensure current capital outflow measures are being enforced.”