Exchange rate opportunity

China should not overreact to the recent decline of the yuan, as unnecessary interventions will hinder its internationalization

The yuan closed at 6.3606 against the US dollar on Tuesday, hitting the 0.5-percent lowest limit for 10 consecutive days, statistics from the China Foreign Exchange Trade System indicated.

Since China launched its exchange rate reforms, it has been rare for the yuan to experience such a decline against the US dollar, so this has sparked worry and speculation in the market. Some analysts believe it is the result of the accelerated outflow of international capital from China, which reflects a pessimistic outlook on the Chinese economy.