China devalued the yuan by the most in two decades, a move thatrippled through global markets as policy makers stepped up effortsto support exporters and boost the role of market pricing in Asia'slargest economy.

The central bank cut its daily reference rate by 1.9 percent,triggering the yuan's biggest one-day drop since China ended adual-currency system in January 1994. The People's Bank of China(PBOC) called the change a one-time adjustment and said its fixingwill become more aligned with supply and demand.

"The new fixing will be quoted based on the previous day's closing, which is a real market level. The band will become the real band. This is a big step, and bolder than we expected." --Becky Liu, Standard CharteredChineseauthorities had been propping up the yuan to deter capitaloutflows, protect foreign-currency borrowers, and make a case forofficial reserve status at the International Monetary Fund.Tuesday's announcement suggests policy makers are now placing agreater emphasis on efforts to combat the deepest economic slowdownsince 1990 and reduce the government's grip on the financialsystem.

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