The Chinese renminbi has fallen by 1.5% against the dollar over the past two weeks, its biggest decline since the currency was de-pegged in 2005.
The Financial Times reported that heavy intervention from the People’s Bank of China (PBOC) has driven the currency lower reversing an 18 month upward trend. State-owned banks are believed to have been instructed to buy dollars, accumulating a record $73 billion of foreign currency, pushing China’s foreign exchange reserves up to $3.8 trillion.
The PBOC played down the move, saying that the degree of currency volatility was ‘normal by the standards of developed and emerging markets’,
Despite its latest intervention, many analysts expect the renminbi to continue climbing against the dollar over the course of the year.