Yuan’s midpoint reference below 7, first time since 2008

China’s central bank has set the official midpoint reference for the yuan weaker than 7 per US dollar for the first time since 2008.

The central parity rate of the yuan weakened 43 basis points to 7.0039 against the US dollar on Thursday, lower for a sixth consecutive day.

On Wednesday, the central parity rate of the yuan was set at 6.9996 against the greenback, and the onshore yuan ended at 7.0602 per dollar.

The US move to label China as a currency manipulator has no basis and does not accord with the facts, China’s foreign exchange regulator said, as reported by the Xinhua News Agency on Wednesday.

Wang Chunying, spokesperson for the State Administration of Foreign Exchange, said on Wednesday that the US action will seriously worsen the global economic and trade environment and hurt global growth.

China will keep its foreign exchange management policies stable and consistent. “It is the US’ escalating trade friction that has affected the exchange rate of the yuan, to which the market has already fully responded,” said Wang.

Analysts said the yuan still has room to depreciate toward 7.1 per US dollar, with a fluctuation range between 6.9 and 7.2, while betting on the yuan as a strong currency in the long term.

Mei Xinyu, a veteran analyst close to the Ministry of Commerce, said that two-way fluctuation is expected to last for quite a while with the central bank reducing its intervention.

“The currency won’t depreciate that quickly to 7.1 or 7.2, and it’s hard to stay at either of those two points for any length of time,” said Mei.