UPDATE 1-China launches new yuan index to sway markets away from yuan-dlr concentrate

BEIJING China has begun issuing a yuan exchange price against a basket of currencies in a move to discourage investors from exclusively tracking the yuan’s fluctuations against the U.S. dollar.

The yuan has been weakening against the dollar in recent months, mainly pressured by industry jitters about slowing development in China and an expected interest rate rise in the United States.

The China Foreign Exchange Trade Technique (CFETS) announced late on Friday that it had launched a new trade-weighted yuan exchange rate index, which was at 102.93 on November 30, a rise of two.93 % from the finish of 2014. In that very same period, the yuan has fallen three % against the dollar.

The move is intended to “facilitate the market to observe the modify of RMB powerful exchange price from distinct perspectives”, the CFETS, China’s interbank foreign exchange industry, said in a statement.

“It is more desirable to refer to both the bilateral RMB-USD exchange price and exchange rate primarily based on a basket of currencies,” stated a commentary on the site of the official foreign exchange market place, which was also published on the central bank’s website.

Chinese officials have urged investors to gauge the yuan’s adjustments against a basket of currencies, rather than just the dollar, in a bid to ease market issues about the yuan’s weakness. Signaling to markets that the yuan’s weakness wasn’t unusual, the officials have noted the dollar’s gains against significant currencies.

Some analysts think the move signaled the central bank’s intention to progressively shift towards a basket system for the yuan, but other individuals disagreed.

“It ought to not be regarded as a formal policy shift by the PBOC to a certain exchange rate targeting regime that, the Monetary Authority of Singapore makes use of, for instance,” analysts at HSBC mentioned in a note.

On Friday, the yuan fell to its weakest in four-1/two years and posted its longest weekly losing streak in a decade, following the People’s Bank of China set its every day guidance rate at its weakest level given that August 2011.

The extended decline has prompted traders to wonder how a lot Beijing is prepared to let the currency to fall.

(Reporting by Beijing bureau Editing by Hugh Lawson & Shri Navaratnam)