THE central bank weakened the yuan’s reference rate against the U.S. dollar for the sixth straight trading day yesterday, the longest sequence in nine months, after expectations of a U.S. interest rate hike put upward pressure on the dollar.

    A series of positive readings on the U.S. economy and increasingly upbeat statements from Federal Reserve head Janet Yellen have fanned speculation the U.S. central bank will lift borrowing costs by the end of the year.

    This has sent the dollar rallying against most of its peers, including the yuan, which is also known as the renminbi.

    The People’s Bank of China yesterday set the yuan’s central rate against the greenback at 6.7258, a new six-year low after it passed the 6.7 mark Monday.

    It was the longest sequence of consecutive reductions since January, when world markets were roiled by concerns over the state of the Chinese economy.

    Analysts expect the yuan to fall further in the face of dollar strength, slowing growth in China, and capital outflows.

    “We have smashed through what I had dubbed as ‘the line-in-the-sand du jour’ of 6.70 and where we stop, no one knows. Clearly, the People’s Bank of China doesn’t want to see a sharp sell-off. But it also no longer seems to mind a slow one. Perhaps the next psychological target is 6.75,” said Michael Every, head of Asia-Pacific financial markets research at Rabo Bank.

    “After that we must surely be looking at the 6.83 level that the currency was pegged to the dollar from 2008 all the way to mid-2010,” he added. “Clearly, there is a lot of atoning to do for all that previous pegging.” (SD-Agencies)