SHANGHAI - China's yuan has been under depreciation pressure this year amid rising headwinds for the broad economy, and an escalating Sino-U.S. trade dispute also heightened worries over growth outlook.
The Chinese currency has lost more than 6 percent of its value to the dollar since the beginning of this year, and is down nearly 10 percent since March, when the first set of tit-for-tat U.S. and Chinese tariffs were announced.
The psychologically critical 7 per dollar level remains in sight, a level that was last hit during the global financial crisis in 2008. The market's focus has now shifted to whether the central bank will firmly defend that level or let the yuan weaken further, and how much.
Following is a timeline of recent policy moves and official market-stabilising statements by the People's Bank of China (PBOC):
** Nov 7 - The PBOC sells its first yuan-denominated bills in Hong Kong, raising 20 billion yuan ($2.88 billion) and giving it a new tool to manage the currency in offshore markets as it faces further pressure.
** Oct 31 - China's central bank says it will issue 20 billion yuan of bills in Hong Kong next month, its first issuance in the former British colony, giving it another tool to manage its currency as it struggles at multi-year lows.
** Oct 26 - Pan Gongsheng, a vice governor at the PBOC warns against speculators who seek to short the yuan, and says China will be able to keep its yuan currency stable due to the country's healthy economic fundamentals and ample foreign exchange reserves.
** Oct 9 - In Hong Kong, the overnight cost of borrowing offshore yuan surges by 326 basis points to 5 percent, the highest level since late May, amid signs that Chinese state-owned banks were squeezing liquidity to make yuan-shorting more costly, traders said.
** Sept 19 - Premier Li Keqiang said in a speech at the World Economic Forum in Tianjin that China has ample policy tools to cope with difficulties and challenges, and it will keep macro-economic policies steady.
** Major Chinese banks have been active in the offshore yuan forwards market in early September, traders said, conducting operations that have tightened liquidity for offshore yuan before the public comment period on U.S. tariff policy ends.
** Aug 24 - The PBOC says it has adjusted its methodology for fixing the yuan's daily midpoint by re-introducing a "counter-cyclical factor" in order to keep the currency market stable, amid broad dollar strength and trade tensions between Washington and Beijing.
** Aug 16 - China bans commercial banks from using some interbank accounts to deposit or lend yuan offshore through free trade zone schemes, sources told Reuters, closing a loophole for potential capital outflows.
** Aug 6 - China's central bank is said to have urged some banks to prevent "herd behaviour" and momentum-chasing moves in the foreign-exchange market, a Bloomberg report said, citing unnamed sources.
** Aug 3 - The PBOC announced it is setting a reserve requirement ratio of 20 percent for financial institutions settling foreign exchange forward dollar sales to clients, effectively raising the cost for investors shorting the yuan.
** July 19 - Wang Chunying, spokeswoman at the State Administration of Foreign Exchange (SAFE), tells reporters the regulator would bolster "macro-prudential management" and "micro-level market supervision" and use "counter-cyclical" measures to deal with instability.
** July 3 - PBOC Governor Yi Gang says it is closely watching fluctuations in the foreign exchange market and would seek to keep the yuan at a stable and reasonable level.
** Major state-owned Chinese banks have been seen swapping yuan for dollars in forwards since mid-June, traders said. The operations pushed the yuan's anticipated value against the dollar in a year's time sharply higher.
($1 = 6.9462 Chinese yuan)
(Compiled by Winni Zhou and Andrew Galbraith, Editing by Sherry Jacob-Phillips)