China yuan lost 7% value in 2016; worst show since 1994

China has reduced the share of US dollars in its foreign exchange basket and added 11 more currencies for measuring the yuan which lost about seven per cent value against US dollar last year becoming the worst-performing major Asian currency, a media report said. China diluted the role of the dollar in its trade-weighted foreign-exchange basket from 26.4 to 22.4 per cent for measuring the yuan value, a technical adjustment to redirect market attention from the yuan-dollar parity as Chinese currency steadily weakened against dollar, Hong Kong based South China Morning Post reported. The China Foreign Exchange Trade System, said on December 29 that it would expand the currency basket to 24 foreign currencies from the start of 2017, from the current 13 currencies. Among the 11 currencies to join the 13 existing ones are the South Korean won, Swedish krona, Saudi riyal, the South African rand, the Hungarian forint, the Turkish lira and the Polish zloty. It is the first time China has adjusted the basket weighting since it published the trade-weighted basket in December 2015. Although other central banks, including the US Federal Reserve and European Central Bank, also release similar nominal effective exchange rate indices for their currencies, calculated against a basket of trade partner currencies, the People’s Bank of China has been particularly active in promoting the yuan’s rate against a group of currencies, rather than the dollar alone, the report said.