The Chinese yuan’s foreign exchange rate eased against the US Dollar on Monday. That’s after the central bank widened the yuan’s daily trading range to 2% over the weekend.
The RMB to USD rate closed at 6.1781, a near 300 pips drop from the last session. The People’s Bank of China on Saturday doubled the yuan’s trading band as a part of the commitment to China’s financial reforms amidst softer economic growth.
The central bank set the mid-point rate at 6.1321 to the US dollar at the opening and it once fell more than 300 pips during the day.
Analysts say the central bank’s move aimed to offset the widely held perception that yuan is a safe one-way bet. They also say the central bank would be careful not to weaken the yuan too much to deter foreign capital inflows over the long run.