Yesterday, China Foreign Exchange Trade System announced that the weight of US dollar in its currency basket will be lowered 4% from 0.2640 to 0.2240, which suggested a vital step of responding to yuan’s devaluation, and furthermore, it verified ANBOUND’s previous proposal on adjusting the dollar weight. Our chief researcher Chen Gong has stated that though there are several currencies in the basket besides US dollar, among which the dollar weights below 50%, the basket is too largely affected by the dollar to get rid off it. We have reasons to believe that China’s central bank decisively lowering dollar’s weight has shown its’ determination and action in dealing with the problem of yuan’s exchange rate.
