The People's Bank of China Friday set the mid-point rate for the yuan at the lowest level in eight-and-a-half years as heavy capital outflows and a hawkish Federal Reserve raise currency pressures in the world's second-largest economy that the government says are manageable.
The yuan's mid-point was set at 6.9508 per dollar Friday, the lowest since May 2008, compared with 6.9289 on Thursday. China's central bank lets the yuan spot rate rise or fall a maximum of 2 percent against the dollar relative to the official fixing rate.
Haibin Zhu, China chief economist for JP Morgan, said a rally in the dollar following a Fed rate hike this week and a hawkish forecast of three increases in 2017 was the key reason for the yuan's depreciation alongside other currencies.
But China has moved in recent weeks to shore up its currency in the last few weeks on the back of gains in the greenback, including capital controls.
This week, the Chinese central bank has injected a net 250 billion yuan ($36 billion) for the week via open market operations, versus a net 535 yuan billion drain last week, according to Reuters.