The Chinese yuan fell to its lowest level in four months on Friday. Public banks intervene to defend the currency

The Chinese yuan has fallen drastically against the dollar, crossing a key threshold. On the spot market, the national yuan is at 7.2 to the dollar to reach a low of 7.24, its lowest since November 17, 2023. Market sources told Reuters that state banks subsequently stepped in to buy yuan for dollars

The yuan was 7.2251 at noon, 257 pips lower than the close of the previous session. The yuan fell by more than 2% in three months and was put under pressure by growing market expectations of further monetary easing to support the world's second-largest economy as well as by a weaker Japanese yen

The Chinese central bank has been setting its interest rate at firmer levels than market projections for months, traders said.

At the same time, the offshore yuan continued to weaken to the lowest level in over four months at 7.2525.

The sudden weakness of the yuan also took a toll on stock markets, with the Shanghai benchmark stock index falling by 1.4%.