(Yicai Global) Oct. 9 -- The central parity rate of the Chinese yuan against the US dollar has continued its descent, hitting a 17-month trough, though some analysts do not expect further significant falls in the future.

The central parity rate was set at 6.9019 today, representing its lowest level since May last year.

The US Dollar Index, a measure of the value of the US dollar relative to that of the currencies of the country's six key trading partners, strengthened yesterday. The USDX rose 0.17 percent to 95.7670 as of 4.40 p.m. in New York.

Many of China's key monetary institutions do not expect the yuan to slide significantly further against the greenback, says Yang Yewei, the macroeconomic analyst from Southwest Securities in China. The People's Bank of China has cut the reserve requirement ratio in response to the strengthening dollar, indicating that the central bank's policy is clearly focused on stabilizing the domestic economy and the financial market. The loose monetary policy will remain unchanged even when the real economy faces pressure, he said, adding that there will be some depreciation pressure on the redback but the overall situation is controllable. 

The cutting of the reserve requirement ratio indicates that the central bank is willing to and capable of keeping the exchange rate of the yuan against the dollar at a certain level, said Zhang Ming, a researcher from Chinese Academy of Social Sciences' Institute of World Economics and Politics.

Various regulative measures on controlling capital outflows are being strengthened, which means that the central bank still has the ability to intervene in foreign-exchange reserves and offshore markets, he added. There is little possibility that the exchange rate will fall below the seven-mark.

Editors: William Clegg