THE yuan yesterday fell to its lowest level in 16 months, as pessimism about China’s slowing economy deepened despite signs of slight improvement in the manufacturing sector.

    The yuan’s quickening pace of decline in recent days also suggests China has grown more tolerant of a weak currency as a tool to help struggling exporters. Authorities have unveiled other growth-supportive measures, ranging from accelerated infrastructure spending to easier credit for rural lenders.

    The yuan fell as low as 6.2465 to the U.S. dollar shortly after trading began on Wednesday, down from 6.2375 Tuesday and marking its weakest level since Dec. 14, 2012, when it hit 6.2475. That marks a loss of 3.1 percent for 2014, more than offsetting last year’s 2.9 percent gain and making the yuan Asia’s worst-performing currency.

    “The central bank is happy to see a weaker yuan which will help restore growth when the economy is slowing. I expect the yuan to fall to 6.26 by the end of this month,” said Liu Dongliang, senior currency analyst with China Merchants Bank.

    A popular private-sector gauge of China’s manufacturing activity showed a slight improvement this month, with the preliminary HSBC China Manufacturing Purchasing Managers Index rising to 48.3 in April from 48.0 in March, HSBC Holdings said yesterday. But economists were quick to sound cautions.

    “With the reading below 50, the index shows that the sector remains in a contractional mode. The overall picture of weakening economic momentum hasn’t changed,” said Steve Wang, economist at Reorient Financial Markets.

    “There are a lot of so-called China bears at the moment and I think the pressure for capital outflows is building up. The central bank seems willing to let market forces drive the yuan’s performance,” Wang added. (SD-Agencies)