China cuts yuan-dollar rate for third day

Kim Hjelmgaard | USA TODAY

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China's central bank on Thursday allowed its yuan currency to drop against the dollar for a third straight day, although the devaluation was smaller than ones earlier this week.

The People's Bank of China, or PBOC, cut its so-called guiding rate against the dollar by 1.1% but also issued assurances that the currency was not in free fall. The yuan later strengthened against the dollar.

On Tuesday, the PBOC slashed the benchmark rate nearly 2% in what it called a "one-time correction."

However, it then dropped the rate again Wednesday by a further 1.6%. The yuan is down roughly 3% against the dollar since it began its slide.

During a press conference in Beijing on Thursday, the PBOC attempted to downplay speculation that the yuan would be further devalued.

"After a two-day adjustment, the (yuan) has gradually returned to a more market-oriented level," the central bank said.

The unexpected interventions have nevertheless roiled financial markets in recent days, though global stocks stabilized Thursday.

In a Tuesday statement, the International Monetary Fund welcomed changes to the way China determines its exchange rate, saying it would "allow market forces to have a greater role in determining" that rate.

A weakened yuan boosts China's export competitiveness on international markets.