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The yuan dropped to a one-month low with a surprisingly low opening yesterday after government moves to boost the economy and stabilize exports.
The People's Bank of China set the central parity rate of the yuan at 6.8505 against the US dollar yesterday. The central bank made the daily reference rate based on average weighted quotes from market traders.
"The central parity rate of the Chinese yuan yesterday is surprising," said Tommy Xie, an OCBC Bank economist, yesterday. "The market has got used to the stable rate of around 6.83 against the greenback for a month."
The weakening yuan is partly a market response to President Hu Jintao's comments over the weekend over concerns about the increasing negative impact from the global financial crisis on China and the country's moves to stabilize its exports, Xie said.
China's stance on a stable growth on foreign trade may indicate that the yuan may depreciate next year, Xie said.
The yuan has been stabilizing for a month against the greenback while its nominal effective exchange rate is rising against several currencies to a near 20-year high.
The yuan trades at about 10 against the British pound.
"The financial crisis is gloomy news for Chinese students seeking overseas postgraduate studies because it's more difficult to get scholarships during bad economic times," said Michael Yu, chairman of New Oriental Education & Technology Group. However, the depreciation of pounds and Australian dollars have improved the lot of Chinese students in Europe and Australia.
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