On Tuesday, the central bank set the target 1.9 per cent below Monday’s – the biggest one-day change in a decade.

The devaluation has been decried by United States politicians from both major parties as grasping for an unfair export advantage.

The yuan was also down about 0.2 percent in worldwide trade at 6.4616 per dollar.

Shanghai shares closed up 1.76 percent on Thursday, while Hong Kong and Tokyo also rose.

The yuan is still only allowed to fluctuate up or down two per cent on either side of the reference rate.

YUAN SLIDE: The Chinese currency fell for a third day but by afternoon its decline was only 0.5 percent compared with drops of up to 2 percent on the previous days.

In a bid to ease jittery global markets, China’s central bank said yesterday there was no basis for further depreciations in the yuan given the nation’s strong economic fundamentals.

Zhang Xiaohui, assistant governor of the People’s Bank of China, says the value of the yuan has gradually returned to market levels as the discrepancy between the central parity rate and the actual trading rate has been corrected after declines in the past few days. That was also slightly stronger than Thursday’s close of 6.3982 yuan.

The day after the People’s Bank of China (PBOC) shifted to a more “market-oriented” system for setting the exchange rate, it had its first opportunity to show investors how the mechanism would work.

It comes after recent economic data out of China has reinforced concerns that growth is slowing in the world’s second-largest economy.

He added that Beijing’s decision to lower the yuan’s value coincided with the worldwide Monetary Fund’s (IMF) ongoing consideration of including the currency into its so-called basket of supplementary foreign exchange reserve assets.

Then there’s the chance that other countries will adopt copycat devaluations to help their exporters compete with China, thereby igniting a currency war that disrupts global trade.

“Exports are more a function of foreign demand, with the exchange rate playing a secondary role”.

China’s move has sent shock waves through Asian markets but the China central bank sought to calm fears, saying it was not the start of a sustained depreciation.

“Our modelling work suggests Fed tightening would be delayed and slower, with US 10-year yields dropping back below 2 per cent in 2016-17″, said Marcos Casarin from the forecasting firm Oxford Economics.