Yuan at five-year low as PBoC surprises with weaker fixing

BEIJING: The yuan sank to a five-year low after China’s central bank set the currency’s reference rate at an unexpectedly weak level, a sign that policy makers are becoming more tolerant of depreciation as intervention costs rise and economic growth slows.

The People’s Bank of China (PBoC) cut its daily fixing to the lowest level since April 2011, weaker than Tuesday’s onshore closing level. The currency tumbled 1.1% in Hong Kong’s freely traded market – the most since the day after a surprise devaluation in August – and lost 0.6% in Shanghai as both exchange rates slumped to their weakest levels since at least March 2011. The gap between the two widened to a record.