People’s Bank of China (PBOC) has devalued its currency, setting the midpoint at 6.2298 on Tuesday, a level of 1.85% weaker than on Monday.
As stated by the POBC on their website, effective from 11th of August, the midpoint will be determined by market maker quotes along with the closing level. The devaluation is a one-time adjustment that plans to keep the yuan stable at a reasonable level, which will strengthen its market role.
The strengthening of their currency was the cause of China’s market struggle, and with this move they are hoping to balance out their market. It is expected that with the devaluation of the yuan, the Asian market will strengthen and consequently, the yuan will consistently strengthen as well.