Chinese financial authorities have let the yuan fall in value for the second straight day on Wednesday, providing a boost for the country's exporters. Meanwhile, other countries, such as the United States, have denounced China's decision to let the yuan devaluation trigger speculations of a currency war.

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Reuters reported that the yuan closed on Wednesday at 6.4510, its lowest value in four years. The People's Bank of China (PBOC) has reassuranced investors that its decision to devalue the yuan is meant to make the currency amenable to the dictates of the international foreign exchange market. The PBOC said that it has no intention of letting the yuan continuously lose its value.

An unnamed foreign exchange banker based in Shanghai confirmed the PBOC's declaration, adding that government-owned banks were unloading their dollars on Wednesday to arrest the yuan's further decline.

As of Wednesday, the Chinese currency has shed more than 3 percent of its value in the local market and almost five percent in the international finance market.

The two-day devaluation of the yuan has caused many stock markets in Asia and Europe as well as the United States to fall from one to two percent. Financial analyst are warning that the yuan's continuing devaluation may trigger a currency war, according to The Guardian.

Foreign exchange experts said that if the PBOC lets the yuan fall further, it may prompt other countries to devalue their currency to make it more competitive against the Chinese currency.

The BBC reported that the Chinese central bank has changed its currency policy of being the only decision maker when it comes to determining the daily value of the yuan.

The PBOC will now let the yuan's value be determined by the market forces as long as it does not go beyond or lower than 2 percent from the midpoint rate. The midpoint value will in turn be determined by the yuan's last trading rate and the significant events happening in the international market. 

American Senator Chuck Schumer, however, is convinced that China is deliberately letting its yuan devalue to help its exports recover. By July of this year, China's exports had contracted by more than 8 percent.

Tagsyuan devalues, Yuan Depreciation, currency war, yuan spot market rate, yuan exchange rate, People's Bank of China (PBOC), Chuck Schumer, midpoint rate