The depreciation of the yuan has provoked concerns about the stability of the currency. But analysts say, it simple proves the yuan's value has become more flexible.
China's central bank announced on June 19th this year that it would further the reform of the formation mechanism of the yuan exchange rate to improve its flexibility.
Experts say there's no need to worry about the yuan's stability, and the recent depreciation is merely a temporary fluctuation.
Ding Zhijie, Dean of Finance of University of Int'l Business & Economics said "I believe the Renminbi will appreciate in the next two years. But the trend will be different to that of the 2005-2008 period, when the currency was appreciating in a single direction. I believe the currency is headed for a two-way fluctuation in the future."
Some experts also attribute the recent tumble to the worsening outlook on global economic recovery.
Liu Weiming, Senior Analyst of China CITIC Bank said "I think the stronger U.S. dollar against other currencies is also causing the yuan's depreciation. And the main reason for that is the slowdown in world economic growth. Developed countries are facing great risks of a double dip recession."
Experts are saying the yuan's temporary depreciation is by no means caused by the worsening domestic economic environment. So, they don't expect currency fluctuations will have any impact on China's capital market.