China scrambles to show it can support the plunging yuan as the currency falls toward a 14-year low

• The yuan has plunged against the dollar in 2023 with China's economic revival floundering.
• Beijing is battling to show it can support the currency as it falls toward a 14-year low.
• China’s central bank fixed the renminbi at a stronger level Thursday after a state-backed newspaper said it had the tools to shield it from panic selling.

Beijing is battling to show that it can prop up the Chinese yuan as it plummets toward a 14-year low.

China's central bank and a state-backed newspaper both sought to support the currency this week amid signs that the country's post-COVID economic revival has started to sputter.

The renminbi had fallen to a seven-month low of under 7.27 yuan per dollar Wednesday, meaning it's now less than 1% of lows it hit during the first quarter of 2008.

The plunge came after an economic indicator assessing activity in the country's services industry fell more than expected, another signal for investors that growth has started to flounder despite Beijing lifting its harsh zero-COVID lockdowns toward end-2022.

The state-backed Financial News responded to the yuan's fall by publishing a commentary piece that said the People's Bank of China had the necessary monetary tools to shield the currency from "panic" selling.

The publication blamed yuan depreciation over the past two months on short-term economic weakness but said that the currency could still stabilize or even strengthen on either a rosier outlook or supportive monetary policy.

The central bank then said on Thursday that it would fix the renminbi at a stronger-than-expected level of just under 7.21 yuan per dollar.

The yuan is pegged against the dollar at a rate set by Beijing, but allowed to strengthen or weaken within a 2% range.

Read more: Why China's faltering economy could soon become a top-of-mind concern for the US stock market