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06 May 2016, Bannett Fernandes, EMIS Editor

China’s Yuan weakens after People’s Bank of China cuts the currency’s fix

The People's Bank of China set the value of the yuan - also known as the renminbi (RMB) - at 6.4943 to $1.0, weakening 0.59 percent from the fix of 6.4565 the previous day, according to data from the Foreign Exchange Trade System.

One way China maintains its control over the currency is by allowing the yuan to rise or fall two percent on either side of the daily fix.

According to some analysts, the weaker fix was in line with strength in the US dollar on Tuesday, as financial authorities seek to make trading more market oriented.

On Tuesday, the dollar rose against most of its peers as global growth worries swept equity markets and pushed oil prices lower, boosting demand for the safe-haven US currency.

Liu Xuezhi, an analyst at the Bank of Communications, told AFP says, “To maintain a stable currency market, the RMB weakened accordingly."

Wednesday's cut came after China on Friday raised the yuan-dollar exchange rate by 0.56 percent from the previous day, the biggest increase in almost 11 years.

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