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PBOC Lowers Yuan Rate and Halts Two-Day Advance

The yuan halted a two-day advance after the central bank lowered the reference rate by the most in a week.

The State Council yesterday approved tax breaks for small companies and reduced fees for exporters after a report by HSBC Holdings Plc and Markit Economics indicated a manufacturing slowdown worsened in July. The People’s Bank of China weakened the reference rate by 0.1 percent to 6.1759 per dollar. The Bloomberg Dollar Index, which tracks the greenback against 10 major currencies, rose 0.5 percent yesterday after data showed new home sales in the U.S. rose to a five-year high in June.

The currency slipped 0.03 percent to 6.1377 per dollar as of 10:21 a.m. in Shanghai, China Foreign Exchange Trade System prices showed. The currency is allowed to diverge a maximum 1 percent from the central bank’s fixing. The yuan has appreciated 1.5 percent this year, the only gain in Asia.

Bloomberg [1]

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