The renminbi has fallen to the bottom of its official trading band against the dollar for six straight days, an unprecedented indication of the Chinese currency’s potential weakness as the economy slows.
Beijing has so far acted to keep the renminbi largely stable against the dollar by supporting its value and selling some of the country’s massive pile of foreign exchange reserves. But the intervention is prompting growing discussion in China about whether the renminbi could depreciate or at least become considerably more volatile.
The central bank controls the renminbi within a narrow trading band, setting a daily reference rate and then letting it fluctuate up or down 0.5 per cent from that level. Looked at in isolation, the central bank’s daily fixing shows the currency to have been steady against the dollar, even appreciating a tiny amount over the past week.