According to Garrett Knight Associates, China’s central bank, the PBOC (People’s Bank of China) has allowed the country’s currency the yuan, to depreciate a full 2% against the US dollar raising the specter of renewed accusations of currency manipulation.

The move comes after a slew of poor data pointing to weaker-than-expected performance from the Chinese economy including an 8.3% slump in exports in July.

“Clearly, there are limits to how much policymakers are prepared to tolerate a strong currency while demand for China’s exports continue to wane,” said Sean Mannion, Senior Asia Pacific markets strategist at Garrett Knight Associates.

The decision saw other Asian currencies dip against the greenback in sympathy. The Singapore, New Zealand and Australian dollars and the Korean Won fell in intraday trading.

“Up until now, we wouldn’t have thought that the yuan would be one of a basket of emerging market currencies that face depreciation against the US dollar in the event that the Federal Reserve actually does go ahead and raise US interest rates for the first time in 9 years but we may need to re-evaluate that position,” said Mannion adding that Garrett Knight Associates still doubted that rates would rise any more than 50 basis points.

China has faced a number of headwinds this year including a 30% fall in the value of Chinese companies listed on its two main stock indices. Manufacturing and factory output have fallen significantly but policymakers’ efforts to rebalance the country’s economy have begun to bear fruit as consumers assert their power in retail spending.

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