(Yicai Global) Oct. 13 -- The People's Bank of China weakened the yuan by 170 basis points against the dollar this morning, fixing the central parity rate at 6.7296. The market price of yuan tumbled against the buck yesterday after the central bank cut the reserve ratio for banks selling foreign exchange forward contracts.

The onshore yuan market closed at 6.7358 yesterday, depreciating 223 basis points during the day, after the PBOC cut the reserve ratio for forward forex sales to zero. Financial institutions had previously been required to deposit 20 percent of such sales with the central bank to mitigate risk.

The yuan has been on a strong run lately, gaining 4.5 percent against the greenback in the last quarter in its best performance in 12 years. The redback's central parity rate against the US dollar hit 6.7126 yesterday, a record since April 23 last year.

The China Foreign Exchange Trade System, the interbank trading and foreign exchange division under the central bank, sets the benchmark on the morning of each business day. Spot rates may deviate 2 percent above or below its figure.

Editor: Ben Armour