Following the rumors that the central bank is willing to let yuan to weaken to 6.8 against the US dollar, in over 10 minutes time, the offshore yuan plunged 400 basis points and fell below 6.7 against the US dollar while the onshore yuan too dipped to 6.6539 against the US dollar.

Subsequently, the central bank issued a statement saying that some media continuously publish inaccurate information on the yuan foreign exchange rate, which have mislead expectations and fuelled market speculations.

All of a sudden, the questions on whether there will be a rapid depreciation of yuan and whether the central bank wants yuan to depreciate sharply have again triggered panic in the market.

The research team at ANBOUND Consulting is of the view that the economic downturn, the excessive issuance of yuan along with other factors have determined that the yuan will encounter a depreciation trend in the mid-long term.

In fact, a moderate depreciation of yuan also seems to be in line with China's realistic interests.

However, a unilateral large scale depreciation of yuan will not occur in the short-mid term, the central bank will not allow this to happen, therefore, there is no need for the market to panic.