Further falls could start to change the fortunes of some businesses in and out of China.
China’s Central Bank has again cut the guiding rate for the national currency, the yuan, a day after August 11 record 1.9% devaluation.
The move sent fresh shockwaves through Asian markets, but the bank has sought to calm fears, saying it was not the start of a sustained depreciation.
The yuan fell another 1% on August 12, marking the biggest two-day lowering of its rate against the dollar in more than two decades.
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The International Monetary Fund (IMF) said the move to make the rate more market-based “appears a welcome step”.
“Greater exchange rate flexibility is important for China as it strives to give market-forces a decisive role in the economy and is rapidly integrating into global financial markets,” the IMF said in a statement.
“We believe that China can, and should, aim to achieve an effectively floating exchange rate system within two to three years.”
The IMF added, though, that the decision would not affect its considerations of Beijing’s hopes for the yuan to be added to the “special drawing rights” (SDR) reserve currencies.
These are currencies which IMF members can use to make payments between themselves or to the Fund.
China has long been lobbying to have the yuan included alongside the dollar, euro, yen and the British pound.
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