China's central bank devalued the country's yuan for a second day Wednesday to cushion the slowdown in the world's second-largest economy, while igniting fears of a currency war in Asia.
  

The daily reference rate for the Chinese currency was reduced to 6.3306 yuan against $1 on Wednesday from 6.2298 yuan on Tuesday, the People's Bank of China said in a statement.
  

The yuan's value against the U.S. dollar was lowered by 1.6 percent, following the devaluation of nearly 2 percent a day before.
  

China, which has tightly controlled its currency movement, surprised world markets on Tuesday by letting the yuan weaken against the U.S. dollar.
  

The surprise move was widely seen as the latest measure to prop up its slowing economy.
  

A weakening yuan helps boost Chinese exports by making the country's products more competitive overseas.
  

China targets this year's economic growth rate at 7 percent, marking the slowest expansion in 25 years.
  

In a statement released on Wednesday, however, the Chinese central bank sought to dismiss market expectations of a further decline in the value of the yuan, also known as the renminbi.
  

"In view of both domestic and international economic and financial conditions, currently there is no basis for persistently depreciation of RMB," it said.
  

"After a short period of adaptation, the intra-day exchange rate movements and the resulting central parity fluctuation will converge to a reasonably stable zone," it said.
  

China is South Korea's No. 1 export destination. The South Korean won plunged to a four-year low of 1,192.8 against the U.S. dollar as of 10:42 a.m. (Seoul time) on Wednesday. (Yonhap)