SHANGHAI -- The yuan weakened against the U.S. dollar on Thursday to its lowest level in nearly 13 months, but analysts said it would help authorities control speculative funds betting on continued rises of the currency.
The yuan fell to an intraday low of 6.2334 to the dollar, its weakest level since late February 2013 according to Dow Jones Newswires.
The unit later recovered to close at 6.2270 to $1, according to the China Foreign Exchange Trade System, still much weaker than Wednesday's close of 6.1941.
China's yuan has depreciated 1.25% since the People's Bank of China (PBOC), the central bank, doubled the daily trading band for the currency from Monday.
The currency is now allowed to move up or down two percent daily on either side of a mid-point set under the guidance of the bank, which says it polls market makers.
Although authorities have pledged to move gradually towards full convertibility of the yuan, analysts said recent depreciation might be a deliberate act by the central bank to deter speculative funds by guiding the central parity rate lower.
The mid-point for yuan stood at 6.1460 on Thursday, according to the central bank, compared with 6.1351 on Wednesday.
"The PBOC would be happy to introduce uncertainty about the yuan's direction so as to deter speculative capital inflows. They want to make sure it's no longer a one-way bet," Dariusz Kowalczyk, a senior economist and strategist at Crédit Agricole, told Dow Jones.
Copyright Agence France-Presse, 2014
