SHANGHAI-China’s central bank has slashed the yuan’s reference rate against the dollar and it is on track to hit a five-and-a-half year low in the wake of the United Kingdom’s dramatic Brexit vote.

Meanwhile, China’s Premier Li Keqiang called for calm at a time of economic upheaval both in China and around the world on the heels of the historic referendum result in favor of the U.K. leaving the European Union.

“Europe is China’s important cooperative partner, China will continue to work to maintain and develop the China-EU, Sino-British relations, hope to see a united and stable E.U. and a stable and prosperous Britain,” Li said during a World Economic Forum meeting in the northern Chinese city of Tianjin on Monday, according to state-run newspaper The People’s Daily.

The People’s Bank of China Monday lowered the yuan’s parity rate by 0.9 percent to 6.6375 against the dollar; that is its most dramatic weakening since a one-off 1.1 percent devaluation last August. The U.S. dollar has surged in value after Britons voted last week in a historic referendum that the U.K. should leave the European Union.

Following the PBOC’s announcement on Monday morning, the yuan dropped 0.2 percent on onshore trading by lunchtime – China’s currency is allowed to rise or fall by 2 percent in comparison to the daily fixed rate. Monday’s close is expected to be weaker than last Friday’s midpoint of 6.5776 – the yuan’s weakest level since December 2010.

The U.S. dollar, by contrast, saw its largest percentage increase since 2008 on Friday with a 2.5 percent jump. The British pound and the euro have both continued to fall against the U.S. dollar in Asia’s morning trading, with a further 2.2 percent fall recorded for the pound and a 1.2 percent weakening of the euro. The yen, which already gained significant ground on Friday, is up 0.5 percent against the dollar.

Premier Li said China is still on track to meet its economic targets, including GDP growth of 6.5 to 7 percent this year.

“China’s economic growth will inevitably see short-term fluctuations, but the full-year economic and social developments will achieve our main targets,” he said, according to Chinese media.

load comments
blog comments powered by Disqus