Currencies: Here’s why traders think the Chinese yuan could reach a record low against the dollar

The pressure on China’s currency continues to mount as the world’s second-largest economy shows more signs of slowing and traders bet that the dollar will soon buy a record amount of yuan in the offshore market.

As the country returned to work on Monday after the Golden Week holiday, the People’s Bank of China cut the Reserve Ratio Requirement, the percent of deposit liabilities owed to its customers banks are required to hold, for the fourth time this year.

While that may spur banks to lend more, it sent the Chinese yuan USDCNY, +0.0000%USDCNH, +0.0072% another leg lower, moving toward its August low against the greenback and in sight of the psychological 7.00 level.

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