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Friday, November 18, 2016, 11:31

Chinese yuan weakens to lowest level in 8.5 years

By Xinhua

Chinese yuan weakens to lowest level in 8.5 years
This photo illustration taken on September 29, 2016 shows Chinese 100 yuan notes in Beijing. (AFP / Fred Dufour)

BEIJING -- China's yuan fell for an 11th consecutive day on Friday to its lowest level in eight-and-a-half years.

The central parity rate of the yuan weakened 104 basis points to 6.8796 against the US dollar , according to the China Foreign Exchange Trading System.

The central parity rate of the yuan weakened 104 basis points to 6.8796 against the dollar

China may allow slightly more yuan depreciation ahead of December's expected Fed rate hike and likely greater currency pressure from the new US government next year, according to a UBS report.

"We expect the yuan to [be at] 6.9 by year-end and 7.2 at end-2017," the report said.

Li Daokui, an economics professor at Tsinghua University, forecast that the yuan will likely weaken by 3-5 percent in 2017 against the dollar.

Despite recent declines, analysts ruled out the possibility of sustained yuan depreciation in the long term, as the country's economic fundamentals remain solid and it continues to witness progress in economic restructuring.

Official data showed that China's GDP expanded by 6.7 percent year on year in the third quarter, unchanged from the first two quarters.

China's economy is expected to grow steadily in the fourth quarter, said Mao Shengyong, spokesperson for the National Bureau of Statistics.

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.

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