(Yicai Global) July 23 -- The People's Bank of China lifted the yuan's central parity rate against the US dollar, bringing to an end a series of lower fixings over eight straight trading days after US President Donald Trump accused the country of currency manipulation.
The central bank set the redback's midpoint at 6.7593 today, up from 6.7671 in the previous session. The People's Bank of China allows the yuan to move 2 percent either way from the rate it sets daily. The onshore rate opened today at 6.7524, up 150 basis points from its prior close of 6.7680.
On July 20, the yuan recovered from more than one-year lows against the dollar after PBOC weakened the daily reference rate 605 pips to 6.7671, the sharpest decline in almost three years, extending a seven-day depreciation.
The slide has not gone unnoticed in the White House. Trump told US broadcaster CNBC on July 20 that the yuan is "dropping like a rock." "China, the European Union and others have been manipulating their currencies and interest rates lower," Trump tweeted the same day. He also laid into the US Federal Reserve for tightening monetary policy, so "taking away our big competitive edge."
The yuan has weakened sharply amid the greenback's strong rally. The dollar index closed at 94.446 on July 20, down 0.76 from a recent peak.
So far this month, PBOC Governor Yi Gang, Vice Governor Pan Gongsheng and chairman of the China Banking and Insurance Regulatory Commission, Guo Shuqing, have all expressed confidence in the currency to shore up the exchange rate, noting that economic fundamentals are improving in China and there is no basis for significant yuan devaluation.
China does not plan to devalue its currency to gain competitiveness in the export market, they have added.
Editor: Ben Armour