China plays down devaluation fears as yuan cut for third straight day

Deputy central bank governor, Zhang Xiaohui, says yuan is close to ‘market levels’ after two days of declines

Phillip Inman economics correspondent 

THE GUARDIAN - Thursday 13 August 2015

China’s central bank sought on Thursday to allay fears it would engineer a continued fall in the yuan in a move that brought calm to global markets rocked this week by a shock series of devaluations.
The People’s Bank of China said the yuan was close to market levels following three successive declines that stoked fears of a currency war should the US and Japan respond by pushing down their exchange rates.
There is “no basis for persistent and substantial devaluation”, said a deputy central bank governor, Zhang Xiaohui, at a hastily convened news conference on Thursday.
Zhang said the yuan, also known as the renminbi, was close to “market levels” after three days of declines that knocked more than 3% off its value.
“The central bank has the ability to keep the renminbi basically stable at a reasonable and balanced level,” she said.
China cut the reference rate for its currency for the third straight day on Thursday, having taken markets by surprise on Tuesday with the yuan’s biggest one-day devaluation in 20 years. The central bank put the yuan’s central rate - from which it can deviate 2% in a single day - at 6.4010 yuan for $1, a drop of 1.11% from the previous day’s 6.3306.

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