China devalued its tightly controlled currency today following a slump in trade, allowing the yuan's biggest one-day decline in a decade. The central bank says the "one-off depreciation" of 1.9% against the dollar, which follows signs of a weakening Chinese economy, is a move to make its exchange rate system more market-oriented, the BBC reports. The devaluation was the biggest one-day decline since Beijing ended the yuan's direct link to the US dollar in July 2005 and switched to basing the exchange rate on a basket of foreign currencies. The composition of that basket is secret, but the dollar appears to dominate it, which means the yuan has been rising even as the currencies of other developing countries fell.
China's move makes it the third major economy to take actions that weakened their currencies. Initiatives by Japan and the European Union over the past two years depressed the yen and euro. Analysts cautioned against seeing the change as a direct effort to help Chinese exporters, although the depreciation is expected to give the country's flagging economy a boost. The Chinese move caused multiple other Asian currencies to fall against the US dollar, including the Thai baht, Philippine peso, and Singapore dollar, which are at their lowest in five or six years, and the Indonesian rupiah and Malaysian ringgit, which are now at their lowest since the 1997 Asian financial crisis, the Wall Street Journal reports.