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PBoC devalues the RMB

PBoC devalues the RMB

(13 August 2015 – China) The People’s Bank of China (PBoC) made a surprise move on 11 August to devalue to renminbi (RMB), saying the devaluation was the result of reforms intended to reflect the exchange rate markets.

Chinese officials said the move will mean the yuan will partly reflect market fluctuations while still remaining linked to the United States dollar.

The weaker RMB will help lower the prices of China’s exports and possibly help its domestic economy at a time when economic growth has slowed right down.

The RMB, or yuan, is allowed to fluctuate in a band 2 percent above or below a rate set by the central bank based on the previous day's trading.

The bank said that starting on 11 August, in addition to the previous day's exchange rate, the daily fixing of the trading band will take into account supply and demand.

The yuan quickly fell 1.3 percent against the US dollar and was down 1.9 percent by that afternoon.

Currently China’s economic growth is sitting at 7 percent.

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