The renminbi fell 1.6 per cent against the dollar in May

China’s currency suffered its biggest monthly depreciation since its devaluation last August as the central bank denied claims that it had abandoned market-orientated exchange rate reform.

The renminbi fell 1.6 per cent against the dollar in May, after the People’s Bank of China reformed the way it sets its daily guidance rate for the currency, known as the midpoint price. The currency fell 2.6 per cent in August.

The central bank cast that reform as a move to loosen government control of the exchange rate and let market forces play a greater role. Many foreign investors were sceptical of the move because it came when market forces could be reliably expected to weaken the renminbi.

That debate has been reignited in recent days. On Friday, the central bank published a statement online declaring its “unceasing commitment to the direction of market reform and increasing the exchange rate’s bidirectional flexibility”.

Sceptics of the PBoC’s commitment to market reform point not only to the daily midpoint, but also to the central bank’s direct interventions in the market. As concern grows over China’s slowing economy and capital outflow, the PBoC has spent hundreds of billions of dollars to curb renminbi weakness.

But the renminbi has followed the same basic trajectory of other non-dollar currencies as expectations of a summer Federal Reserve rate increase have revived.

While the Chinese currency would probably have fallen even more sharply without intervention, the renminbi’s monthly decline in May undercut claims that the PBoC was narrowly focused on stability.