China’s central bank has devalued its strictly regulated currency for a third day in a row – this time by 1.1 percent. On Tuesday August 11, the RMB was devalued by 1.9 percent, pricing it at 6.2298 to the dollar, in what was said to be a one one-off move to reflect a change in how the daily fix of the currency is determined. However, this was followed by a further 1.6 percent devaluation on Wednesday August 12. The latest depreciation brings the value of the RMB to 6.4010 to the dollar.

This sharp depreciation has stoked fears that the world economy will face a fall in demand from Chinese business and consumers

With Beijing claiming that the depreciations are part of a new attempt to allow market actors more of a role in determining the price of its currency, it would seem that this is part of China’s attempt to reform its currency in order to win inclusion in the IMF’s reserve currency basket – alongside the dollar, euro, yen and pound.

To these ends, the moves may be successful, with the IMF calling it “a welcome step as it should allow market forces to have a greater role in determining the exchange rate,” reported the FT. The Fund, however, went on to note that that the “exact impact will depend on how the new mechanism is implemented in practice”.

This sharp depreciation has stoked fears that the world economy will face a fall in demand from Chinese business and consumers. According to the Financial Times, this second devaluation is “likely to fuel expectations of more sustained weakness in the Chinese currency.”

China, however, looks set to benefit from this depreciation, with lower prices raising demand for Chinese goods from abroad. The world’s second largest economy has faced a recent slowdown, with exports down eight percent in July 2015 compared to July 2014.

As the BBC economics editor Robert Peston notes, the fall in value will “increase the competitiveness of China’s exports at a time when the country’s economy is growing at its slowest rate for six years – and when many economists fear that the slowdown will become much more painful and acute.

However, “for all the spur to growth it may give,” he continues, “the devaluation will reawaken concerns that Beijing is still a million miles from having re-engineered the Chinese economy to deliver more balanced growth based on stronger domestic consumer demand.”

The depreciation is the most significant change in Chinese currency valuation since the 1990s, with Tuesday’s devaluation being the largest one-day change since the Chinese government moved from its tightly pegged currency system to a “managed” floating system a decade ago.

China’s central bank attempted to prevent fears of further slides in the value of the RMB by claiming, once again, reports the BBC, “repeating Wednesday’s assertion that there was no basis for further depreciation given strong economic fundamentals.”