Yuan Falls to One-Month Low as China Seeks to Shore Up Economy

China’s yuan fell to one-month low after the central bank set the reference rate at the weakest level since August, suggesting it may want to weaken the currency to spur the economy. The People’s Bank of China has kept yuan appreciation in check since policy makers shifted focus from stemming inflation to sustaining economic growth at the end of July. President Hu Jintao said China will face “high exposure” to the global financial crisis and an economic slowdown for “a certain period of time,” the official Xinhua News Agency reported on Nov. 29. “Today’s reference rate is totally unexpected,” said Yang Lindong, a foreign-exchange trader at Shenzhen Development Bank Co. in Shenzhen. “The central bank may want to test the market’s response to the possibility of a weaker yuan, but most likely it will keep the currency stable till the end of this year.” The yuan dropped 0.23 percent to 6.8505 a dollar, the weakest since Oct. 28, before trading at 6.8497 as of 9:50 a.m. in Shanghai, from 6.8349 late last week, according to the China Foreign Exchange Trade System. The currency is allowed to trade by up to 0.5 percent against the dollar either side of the reference rate, which was fixed at 6.8505 today.