As China faces capital outflow and currency depreciation pressures, a strategy of preventing the yuan from weakening by intervening may consume a lot of China’s “hard-earned” foreign exchange reserves, Yu Yongding, a former academic member of the monetary policy committee at the People’s Bank of China, said on Monday. A level of 8 or weaker a year from now is given less than a 5 percent chance. The central bank has yet to confirm the supportive action, but it is broadly being treated as fact by market insiders.

Traders said they believed the yuan’s current range between 6.29 and 6.43 to the dollar was well accepted by the market after the currency’s recent volatility once threatened a sharper depreciation.

After global stock and currency markets staggered in response, the PBoC went on the offensive Thursday, telling reporters that the yuan was still a strong currency and that Beijing would keep the unit stable.

Against the greenback, the yuan fell to almost a 2-week low of 6.4230 from an early high of 6.4010. The Chinese stock market fall has had limited impact on global markets as almost all the participants in it are locals, and therefore the contagion could likely be contained.

Offshore yuan (CNH=D3) was trading 0.92 percent weaker than the onshore spot at 6.4705 per dollar by midday.

The weighted average of the overnight repurchase agreement rate, a benchmark measure of short-term borrowing costs among commercial banks, is now at 1.72%, up from 1.57% on the eve of the yuan’s devaluation.

Zimbabwe’s own currency, the old Zimbabwean dollar, ceased circulation in 2009 and would have converted into yuan at a ratio of 40 trillion to one. Further, the reserve requirements ration was reduced by 50 basis points for most big banks. Facing such headwinds, it is clear why more competitive terms of trade seemed like a good idea to the Chinese administration.

Premier was quoted by state television as saying that there is no basis for continued depreciation of the yuan on Tuesday.