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China central bank tries to soothe global markets, says no basis for yuan to fall further

© Reuters. A customer holds Chinese Yuan notes as she pays for pork at a market in Beijing

By Lu Jianxin and Pete Sweeney

BEIJING/SHANGHAI (Reuters) - China's central bank said on Thursday that there was no basis for further depreciation in the yuan given strong economic fundamentals, in a bid to reassure jittery global markets after it devalued the currency earlier in the week.

As the yuan fell for the third straight day, the People's Bank of China (PBOC) said the country's strong economic environment, sustained trade surplus, sound fiscal position and deep foreign exchange reserves provided "strong support" to the exchange rate .

China's decision to devalue the currency on Tuesday by pushing its official guidance rate down 2 percent sparked fears of a "currency war" and roiled global financial markets, dragging other Asian currencies to multi-year lows.

It also drew accusations from U.S. politicians that Beijing was unfairly supporting its exporters.

The PBOC said at the time that the move was a one-off depreciation, but sources involved in the Chinese policy-making process told Reuters that powerful voices within government were pushing for the yuan to go still lower, suggesting pressure for an...


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