The yuan saw its biggest single-day drop since July 2005 when it fell 0.28% to a three-week low against the dollar Tuesday. It closed at 8.0015, down from 7.9790 on Monday and close to the intra-day low of 8.0020. The central bank set the currency's mid-point at 7.9950. Traders did not consider the drop the beginning of long-lasting weakness for China's currency but rather attributed the fall to a shortage of dollars among local banks and central bank intentions to create more volatility in the market, Reuters reported. The yuan fell amid strong demand for dollars, possibly caused by the newly launched Qualified Domestic Institutional Investor program that allows some banks to invest in overseas financial markets.
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