China gladly employs all available stimulus tools to shore up the crisis-stricken economy. The People’s Bank of China has nothing against the time-proven technique of currency manipulations. The pandemic crippled the second largest global economy. Moreover, COVID-19 dealt a blow to China’s political ambitions. So, Beijing believes that tough measures are quite appropriate. Obeying the directive from the ruling Communist party, the central bank devalued the yuan’s exchange rate to the lowest level since 2008. The renminbi tumbled 270 points in a single day to 7.1209 against the US dollar that was the steepest drop on record. This move did not catch market participants off-guard, though they expected milder devaluation. Notably, China’s monetary authorities do not admit wrongdoing in these tricks, saying that such adjustments are a common practice on Forex.   

Experts at China’s UBS subsidiary say that the yuan is going on fluctuating at an appropriate exchange rate. Its stability is maintained by monetary policy of the People’s Bank of China. They expect the renminbi to keep on fluctuating in a flexible range for a while. Interestingly, the central bank already devalued the national currency in February this year. However, that time it was complicated to reckon the scale of the pandemic damage. So, earlier this year some analysts were betting on the yuan’s strength amid expectations of a fast recovery in China’s economy. In practice, the coronavirus hammered those forecasts. At present, the yuan is trading at historic lows while the domestic economy is plumbing the depths of a downturn.