China’s central bank seemingly stepped in to calm the country’s foreign exchange markets on Tuesday as the yuan continued its plummet with its worst recorded day of trading.
Early trading saw the currency drop 0.8% against the dollar before recovering to a 0.3% loss, the Financial Times reports, a sign suggesting the heavy buying of yuan by state banks. Furthermore, instead of just falling relative to the dollar, the yuan also weakened with respect to the currency basket used as a benchmark by the central bank.
This comes on the back of the yuan’s worst month ever in June, during which it fell 3.3% against the greenback.
The Governor of the People’s Bank Yi Gang issued a statement on Tuesday assuring traders that the yuan’s weakness could be traced to a strong dollar and “some pro-cyclical behaviour”, but that China was not facing fundamental economic concerns or capital flow imbalances.