The People's Bank of China (PBOC) set the yuan's midpoint against the dollar sharply lower on Monday, the second biggest single-day fall on record and the latest signal that China is willing to let its currency move within a wider range. The central bank allowed the yuan to fluctuate last week after PBOC governor Zhou Xiaochuan said conditions were ripe for the exchange rate to float in a wider range.
The central bank set the yuan midpoint at 6.3282 to the dollar on Monday, making the Chinese currency fall 209 pips or 0.33 percent from the previous day's fixing. It was the second biggest daily fall in the midpoint since China established its modern foreign exchange market in 1994. The biggest single-day fall occurred on August 12, 2010, when the yuan dropped 247 pips or 0.36 percent.
The yuan closed at 6.3265 against the dollar, down from Friday's close of 6.3107. In the offshore non-deliverable forwards (NDF) market, the benchmark one-year NDFs implied yuan appreciation of 0.19 percent in afternoon trade, down from 0.27 percent appreciation implied at Friday's close.
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