Yuan Drops Most in 7 Weeks on Slowdown Signs, Dollar Strength

The yuan dropped the most in seven weeks as concern the global economic recovery is faltering drove the dollar higher and fueled speculation Chinese policy makers will restrict gains to protect exports.

The People’s Bank of China today lowered its daily reference rate by 0.36 percent to 6.8015 against the U.S. currency, the steepest drop since a peg was scrapped in July 2005, after a gauge of the greenback’s strength jumped the most since 2008. China’s industrial output rose 13.4 percent from a year earlier in July, the smallest gain in 11 months, and bank lending increased by the least since March, government reports showed yesterday.