Chinese yuan drops to lowest in a year as People’s Bank steps in

CHINA’S currency traded at the lowest level against the dollar in more than a year yesterday, as the People’s Bank of China (PBOC) intervened to ease reserve rules for the country’s rural lenders.

The yuan has not been lower against the US currency since the first quarter of 2013, trading at 6.238 to the dollar yesterday.

The PBOC lowered the reserve requirement by two percentage points for rural commercial banks, and half a percentage point for co-operatives, but insisted that the change would not affect overall policy. The change will come into force at the end of the week.

The loosening of requirements comes as part of a wider move to prevent China’s economic growth from slowing further.

The government is also moving to allow provincial and municipal governments to issue their own bonds, which would allow them to finance construction projects, but not day-to-day spending.