China's central bank reiterated on Monday that it has the confidence and capability of keeping the yuan exchange rate basically stable.

(File photo: VCG)

The People's Bank of China (PBOC) attributed the weakening of the currency beyond 7 yuan per US dollar on Monday to factors including measures of unilateralism and protectionism, as well as the expectation of additional tariffs on Chinese goods.

The exchange rate tumbled 1.1 percent to 7.0175 per dollar at 9:50 am after China’s central bank set its daily reference rate at a weaker level than 6.9 per dollar for the first time since December. The offshore yuan slumped 1.3 percent to a record low, while the Shanghai Composite Index slid 1 percent.

Despite the weakening, the yuan has maintained basically stable and strong against a basket of currencies.

Seven is not like age, that you cannot resume once surpassing. It's not like a dam, that will roll non-stop after the water floods in. It's more like the water level in the reservoir, whose fluctuations are normal, the statement said.

 "The PBOC has the experience, confidence and capability of keeping the yuan's exchange rate basically stable at a reasonable and balanced level," it said. 

(Compiled by Han Xiaomeng; with input from Xinhua)