China’s yuan weakened against the greenback for the seventh trading day in a row, the longest stretch in nearly two months.
The central parity rate of the yuan weakened eight basis points Tuesday to 6.6113 against the dollar, according to the China Foreign Exchange Trade System.
Under China’s market-based, managed floating exchange rate system, the yuan can rise or fall by 2 percent against the dollar from the central parity rate in the spot market each trading day.
The central parity rate is a weighted average of quotes from dealer banks, and follows a formula based on the previous day’s closing rate and changes in a basket of selected currencies.
On Monday, the U.S. dollar rose against most major currencies, after the U.S. Senate narrowly passed a major tax bill over the weekend.
Fan Ruoying, a researcher at Bank of China Institute of International Finance, said the dollar’s strength, underpinned by the tax bill and upbeat U.S. economic data, will put the yuan under depreciation pressure this month.
However, Fan said because of China’s sound economic fundamentals and the country’s moves to regulate cross-border capital flows, the exchange rate of the yuan is unlikely to see steep depreciation.