RMB falls as state-owned banks buy dollars

The renminbi fell against the US dollar on Tuesday, as signs showed that state-owned banks were buying dollars, the Wall Street Journal reported. The renminbi ended Asian trading down 0.23% to 6.8136 per US dollar, after having risen 0.43% on Monday, the first day of trading following the People’s Bank of China’s announcement that it would pursue increased flexibility in its exchange rate policy. Traders believe that the central bank encouraged state-owned banks to buy dollars to introduce some uncertainty in the renminbi’s exchange rate and discourage speculation. The currency’s fall pushed down global share and commodity prices as initial optimism about the removal of the US dollar peg faded. Ahead of the G20 summit in Toronto, Canadian Prime Minister Stephen Harper pressed China to reveal more about its plans for moving toward a more flexible currency.