What has the central bank done exactly?
On Monday, the People’s Bank of China set its daily “reference rate” for the yuan at 6.2298 to $1, compared with 6.1162 yuan – in effect 1.86% lower. That triggered a further fall in the currency markets. As the authorities pick the mid-point from the previous day as the basis for the next day’s reference rate, they were forced to devalue again or risk ignoring market forces. Choosing the former, it set the rate at 6.3306, fractionally weaker than Monday’s market close. The spot rate has responded by falling another 1.6% on Tuesday, likely forcing a further devaluation.