Data from the People’s Bank of China showed that in the first five months of 2012, the value of the yuan fell more frequently than any year since 2005 when the country launched exchange rate reform. Of 96 trading days in the first five months, the yuan’s central parity rate declined against the U.S. dollar 56 times, the central bank said.During the same period in 2011, the yuan only recorded only four declines, and there were none in 2010.Since late 2011 the market has shown signs it expected the yuan to depreciate. A decline in the yuan’s non-deliverable forwards in Hong Kong started in the second half of 2011, and the value has been lower than the official rate.Wu Qing, financial analyst at the State Council’s Development Research Center, said that in long term, the yuan still had the potential to rise, but in the next two to four quarters, it would see a gradual decline and more fluctuations.Wu said that since the last quarter 2011, the yuan exchange rate had been close to equilibrium and fluctuated both ways. Moreover, slower economic growth in China lowered market expectations for the yuan.In 2011, the country’s current account surplus continued to drop to 2.8 percent of GDP, indicating that the trade surplus had fallen to a reasonable level. Many experts and officials said that it also meant the yuan had reached equilibrium.

via Yuan Continues Its 2012 Decline – Caixin Online.