Shanghai, January 6

China’s central bank today set the value of the yuan currency against the US dollar at its lowest since April 2011, according to the national foreign exchange market, raising worries over the health of the world’s second-largest economy.

The People’s Bank of China (PBoC) set the daily reference rate at 6.5314 to $1 today, down by 0.22 per cent from the previous day, according to the China Foreign Exchange Trade System. It was its weakest for nearly five years.

The move marked the seventh session the PBoC has weakened the yuan, reviving concerns over a shock devaluation of the currency in August, when it guided the unit down nearly five per cent in a week.

“Market forces are exerting strong pressure on the yuan to depreciate against the US dollar,” Bill Adams, senior international economist for PNC Financial Services Group, said in a research note today.

“Chinese economic growth is weak, Chinese foreign trade is contracting, the PBoC has cut interest rates six times since November 2014, US interest rates are rising and capital is flowing out of China,” he said.

At 4:30pm, onshore yuan was quoted at 6.5575 to $1, down 0.58 per cent from the same time on Tuesday.

China limits the yuan to rising or falling two per cent on either side of the reference rate. The central bank intervened in the domestic market on Tuesday to push up the yuan by buying through state-owned banks and selling dollars, the Wall Street Journal reported.

In offshore trading, the yuan declined to 6.6964 to $1 by late afternoon today in Hong Kong, Bloomberg News reported.

China has pledged to make the value of the yuan more flexible and market-oriented, and the International Monetary Fund has announced the unit will join its elite reserve currency basket.