The Chinese yuan fell to a two-year-low against the dollar on Friday, with the country's central bank maintaining monetary easing measures.
The Chinese currency was trading at above 7 yuan to the dollar as of 5:30 p.m. Japan Time on the Shanghai foreign exchange market. It's the first time since July 2020 that the yuan has slid to that level.
The widening gap in interest rates between China and the United States is said to be behind the depreciation. The People's Bank of China lowered key interest rates in August to boost the economy, while the US Federal Reserve has been hiking rates to tame inflation.
Adding to that is concern that the coronavirus situation and the stagnant real estate industry, a key sector in China, will cloud the economic outlook.
China's central bank expressed concern earlier this month about a sharp weakening in the exchange value of the country's currency and announced that it would take measures to keep depreciation in check.
Market sources say a weak yuan is advantageous for export-oriented companies and could shore up the economy. But they say there is also concern about a possible outflow of funds, so authorities are nervous about an excessively weak yuan.