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1st LD-Writethru: Chinese yuan weakens to 6.6001 against USD Wednesday

Xinhua, June 15, 2016 Adjust font size:

The Renminbi, or the yuan, on Wednesday weakened to its lowest level against the U.S. dollar since February 2011.

The central parity rate of the yuan dropped 210 basis points to 6.6001 against the U.S. dollar, according to the China Foreign Exchange Trading System.

In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.

The central parity rate of the yuan against the U.S. dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.

The sharp decline suggests that market sentiment remains cautious due to speculation on a possible rate hike by the U.S. Federal Reserve, according to TD Securities.

Investors kept a close eye on the U.S. central bank's two-day conference that started on Tuesday for more clues on the timing of the next interest rate hike.

Meanwhile, concerns over a possible Brexit also weighed on the market. Latest polls indicated a major surge toward the leave campaign in the United Kingdom, after weeks of an almost 50-50 split. A referendum will be held on June 23, to decide whether Britain will leave or remain in the European Union.

To reassure global investors, Chinese officials continue to hold that the country has no intention of pushing the value of the yuan down to gain a competitive advantage.

The central government has promised to gradually establish an exchange rate mechanism based on market supply and demand with a two-way floating and flexibility feature.

In addition, China's economic fundamentals support the long-term stability of the currency. Its GDP expansion maintained steam in the first quarter of 2016 with signs of improving growth quality. Endit