China has just set the reference rate of the yuan against the USD at 6.5784 yuan per USD - the lowest price in 5 years.

The People's Bank of China (PBOC) set the reference rate down 294 basis points to 6.5784 yuan per US dollar on May 30, the lowest level since February 2011, according to the China Foreign Exchange Trading System (CFETS).

China sets yuan at 5-year low. Illustrative photo

The move came after Janet Yellen, Chairwoman of the US Federal Reserve (FED), signaled the possibility of an early interest rate hike. Speaking at Harvard University on May 27, the FED Chairwoman said that if the economy shows positive signs and growth continues to improve, raising interest rates in the coming months would be a reasonable move.

Janet Yellen's remarks sent the dollar higher against other major currencies, including the Chinese yuan.

In China's foreign exchange market, the yuan is allowed to fluctuate up to 2% above or below the reference rate on each trading day. The yuan reference rate against the US dollar is set based on the average prices proposed by market makers before the interbank market opens each trading day.

Also on May 30, PBOC "injected" 65 billion yuan (equivalent to 9.88 billion USD) into the market to ensure liquidity./.

According to VOV