Chinese Yuan has Biggest DECLINE since 2008

The yuan declined 0.2 percent to 6.8111 per dollar as of 10:17 a.m. in Shanghai, from 6.7976 yesterday, according to the China Foreign Exchange Trade system, reports Bloomberg.. That was the biggest loss since December 2008.

This occurred even though PBOC had set the yuan's daily reference rate 0.43% higher against the dollar, relative to yesterday's close.

Clearly, markets are beginning to understand that the Chinese announcement over the weekend was not as much about the PBOC allowing a huge spike higher in the yuan, as it was an announcement about returning to a basket of currencies as its reference. A basket currency approach is, of course, a dilution of the role the dollar will play in the valuation of the yuan.