SHANGHAI - China’s central bank today set the value of the yuan currency at a more than five-year low against the US dollar, according to the national foreign exchange market, in a pattern of weakness in anticipation of higher US interest rates.

The People’s Bank of China put the yuan -- also known at the renminbi (RMB) -- at 6.5784 to $1.0, down 0.45 per cent from its fix on Friday, according to data from the China Foreign Exchange Trade System. The level was the lowest level since February 2011.

China only allows the yuan to rise or fall two per cent on either side of the daily fix, one of the ways it maintains control over the currency.

"The yuan will depreciate gradually," Song Yu, China economist for Goldman Sachs/Gao Hua Securities, told Bloomberg News. "The main driver for the decline would be a stronger dollar on the back of the expectation that the Fed will raise interest rates."

US Federal Reserve Chair Janet Yellen last week implied that interest rates could be lifted soon.

Yellen, speaking at Harvard University on Friday, said a US rate hike "probably" would be justified "in the coming months" if economic data continued to strengthen.

China rattled global investors with a surprise devaluation last August, when it guided the normally stable yuan down nearly five percent over a week.

At mid-morning today, the yuan was quoted at 6.5800 to the dollar on the onshore market, weakening 0.31 per cent from Friday’s close, according to the national market.— AFP