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China guides yuan to six-month low against dollar

China's central bank guided the yuan to a six-month low against the U.S. dollar on Wednesday, sending the Chinese currency tumbling once trading began minutes later.

The People's Bank of China set the dollar's reference rate at 6.5569 yuan, which meant the yuan was 0.6% lower than the day before--its biggest drop since Jan. 9, 2017. The so-called fix, which reflects the previous day's close and the movement of currencies overnight, put the yuan at its weakest level since Dec. 25.

The weaker fix followed a slump in its value against the dollar on Tuesday. The yuan doesn't trade freely like the dollar or Japanese yen; instead, China's central bank allows the currency pair to trade 2% above and below its reference rate each day.

The yuan still dropped sharply within that band once trading began on Wednesday, losing as much as 0.9% in mainland China, with one dollar buying 6.6159 yuan. That put the Chinese currency at its weakest level since Dec. 19 on an intraday basis, according to Wind Info. In recent action, the yuan pared its loss, with one dollar at 6.5973 yuan.


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