The People’s Bank of China set the value of the yuan—also known as the renminbi (RMB)—at 6.4943 to $1.0, weakening 0.59% from the fix of 6.4565 the previous day, according to data from the Foreign Exchange Trade System.
China only allows the yuan to rise or fall 2% on either side of the daily fix, one of the ways it maintains control over the currency.
Analysts said the weaker fix was in line with strength in the US dollar on Tuesday, as financial authorities seek to make trading more market oriented.
The dollar rose against most of its peers Tuesday as global growth worries swept equity markets and pushed oil prices lower, boosting demand for the safe-haven US currency.
Wednesday’s cut came after China on Friday raised the yuan-dollar exchange rate by 0.56% from the previous day, the biggest increase in almost 11 years.
The impact of the move if followed by a similar move tomorrow will trigger another down ward spiral on the EM currencies.