SHANGHAI: China's central bank on Monday set the value of the yuan currency at a more than five-year low against the US dollar, according to the national foreign exchange market, in a pattern of weakness in anticipation of higher US interest rates.
The People's Bank of China (PBoC) put the yuan -- also known as the renminbi (RMB) -- at 6.5784 to $1.0, down 0.45 percent from its fix on Friday, according to data from the China Foreign Exchange Trade System.
The level was the lowest level since February 2011.
China only allows the yuan to rise or fall two percent on either side of the daily fix, one of the ways it maintains control over the currency.
At 4:30 pm (0830 GMT) on Monday, the yuan stood at 6.5825 to $1.0, down 0.35 percent from Friday's close.
"The yuan will depreciate gradually," Song Yu, China economist for Goldman Sachs/Gao Hua Securities, told Bloomberg News. "The main driver for the decline would be a stronger dollar on the back of the expectation that the Fed will raise interest rates."
US Federal Reserve Chair Janet Yellen last week implied that interest rates could be lifted soon.
Yellen, speaking at Harvard University on Friday, said a US rate hike "probably" would be justified "in the coming months" if economic data continued to strengthen.
China rattled global investors with a surprise devaluation last August, when it guided the normally stable yuan down nearly five percent over a week.
In a sign that people are less willing to hold the Chinese currency, the yuan fell to sixth place from fifth as a global payments currency in April, trailing the Canadian dollar, according to SWIFT, the global provider of financial messaging services.
China's central bank on Friday denied a media report that it was retreating from allowing the yuan to trade in a more market-oriented way.
The bank also dismissed another report that said financial authorities were pressing the United States to reveal the timing of a potential Fed rate hike, according to a statement on its microblog.
"The People's Bank of China always adheres to market-oriented reform," it said, adding the yuan would remain "basically stable".
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