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PRINTThe eurozone crisis is taking a toll on emerging economies as their currencies record their biggest falls against the dollar since 1998, but the yuan is well placed to appreciate, analysts said.
"The recent weakness of the yuan and other currencies of emerging economies was not due to depreciation," said Cao Yuanzheng, chief economist at the Bank of China.
"Instead, the real reason is the rapid appreciation of the dollar as it became a 'safe haven' for investors,'' seeking shelter from the eurozone storm.
The yuan weakened 0.88 percent in the second quarter to 6.3541 to the dollar in Shanghai, the biggest quarterly decline since it de-pegged from the dollar in 2005.
It dropped 0.77 percent to 6.3610 in Hong Kong's offshore market during the same period.
The central bank lowered the currency's daily reference rate, its rate against the dollar, by 0.48 percent in the second quarter, while the dollar index, which rates the dollar against a basket of currencies, strengthened 4 percent as investors favored safer assets, according to data collected by Bloomberg.
The yuan has been allowed, since April, to trade as much as 1 percent on either side of the daily reference rate.
Safe-haven demand has driven the dollar up and dragged down currencies of emerging economies, the Bank of China said last week.
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