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Forex

Local, foreign factors at work as yuan breaches 6-year floor

China's central bank set the midpoint for yuan trading at a six-year low Monday.

HONG KONG -- The yuan's decline against the dollar accelerated Monday in post-holiday trading in Shanghai, owing to both an influx of money into the greenback and domestic developments leaving traders worried about the Chinese currency's prospects.

The People's Bank of China set the reference rate for the yuan -- the center of the band within which the currency is allowed to trade -- at 6.7008 to the dollar Monday. This marked the first time since the end of September 2010 that it was fixed below 6.7, a resistance line that had been tested but held firm for months. The rate was set at 6.7098 yuan Tuesday, representing a 0.5% drop in two trading days, and the currency softened to nearly 6.72 against the greenback during trading.

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