china weakens yuan amid economic and reform b

Shanghai: China’s central bank on Tuesday devalued its yuan currency by nearly two percent against the US dollar, as authorities seek to push market reforms and bolster the world’s second-largest economy.The surprise move marked the biggest drop since China reformed its currency system in 2005 by unpegging the yuan — also known as the renminbi (RMB) — from the greenback.It should make the country’s exports more competitive overseas, but analysts said it could prompt anger in the US.The People’s Bank of China (PBoC) set its daily reference rate for the yuan at 6.2298 to $1, compared with 6.1162 yuan the previous day, effectively 1.86 percent lower.The change came amid speculation China is preparing to widen the yuan’s two percent trading band for the first time since March 2014.The range is calculated from a central “reference rate” each day. Before Tuesday, Chinese officials said they based the fixing on a poll of market-makers, but the PBoC’s move means it will now also take into account the previous day’s close and other factors.Beijing has so far kept a tight grip on the currency’s value on fears major swings and volatile capital flows could present financial risk and reduce its control over the economy.That has made the yuan far more stable than other major global currencies and a two percent move in its value is dramatic — before Tuesday’s announcement it had traded within a roughly 0.4 percent band for four months.