China's central bank set the yuan's exchange rate at 6,5452 to the dollar, the lowest since Feb. 1. The yuan is currently trading at 3 to the dollar, up from 6,5480 at Friday's close.
Previously, however, the governor of the central institute, Zhou Xiaochuan, had reassured the stability of the yuan exchange rate and in a conference in Shanghai, on the occasion of the G-20 summit, had assured that China "will not use the devaluation to enhance export competitiveness.
Zhou also said that, considering China's fundamentals, there is no basis for continued depreciation of the yuan. The governor then reassured that the world's second largest economy remains fundamentally solid and that the central bank has room to support the economy, with an implicit reference to a possible rate cut.
The move had a negative effect on Asian stock exchanges. In Tokyo, the Nikkei index ended trading down 1%, while Shanghai closed down 2,86%, at 2.687 points, returning to its end-2014 levels. Selling was mainly driven by the weakness of the yuan.
