(Yicai Global) Aug. 13 -- The Chinese yuan had its biggest decline in nine days, moving to a one-year low amid an extended rally in the US dollar. 

The People's Bank of China today weakened the yuan's central parity rate 234 basis points to 6.8629 against the dollar, a new low since May 31 last year and the sharpest drop since Aug. 3. The central bank allows the yuan to move 2 percent either way from the reference rate it sets daily.

As of 9.40 a.m., the exchange rate of the onshore yuan versus the dollar moved below the 6.88 mark, while the offshore exchange rate also slid below 6.89.

The dollar index, the greenback's value relative to a basket of foreign currencies, rose to 96.505 at around 9.05 a.m., the highest since July 5 last year.

On Aug. 6, the PBOC convened 14 banks that provide quotations for the reference rates and asked them to avoid pro-cyclical and herd behavior on the depreciating yuan, while they recommended the monetary authority to employ measures to strengthen the exchange rate and enhance the monitoring of overseas markets.

In the short term, the yuan will likely remain under pressure from a strong dollar, but is unlikely to move below the 7 level due to the guidance of PBOC's diversified policy instruments and improvement in China's economic fundamentals.

Editor: Emmi Laine