Aug. 2 (Bloomberg) -- China’s yuan declined the most in almost two weeks as the central bank weakened the currency’s daily fixing after the Federal Reserve refrained from taking action to spur growth.

The Dollar Index climbed 0.5 percent yesterday after the Federal Open Market Committee said the U.S. economy slowed in the first half and it would provide fresh stimulus if necessary. China should expand domestic consumption to ensure stable growth in the second half, according to a front-page commentary piece in today’s People’s Daily, a newspaper published by the Communist Party. The People’s Bank of China lowered the yuan’s reference rate by 0.14 percent to 6.3392 per dollar.

“Investors are disappointed that the Fed didn’t signal any imminent quantitative easing,” said Kenix Lai, a Hong Kong- based currency analyst at Bank of East Asia Ltd. “The yuan is likely to trade weaker on increased demand for dollars. There’s also speculation that China will prevent currency gains to protect exports.”

The yuan fell 0.14 percent, the most since July 23, to 6.3776 per dollar as of 9:43 a.m. in Shanghai, according to the China Foreign Exchange Trade System. The currency is allowed to trade as much as 1 percent on either side of the daily fixing. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 1.5 percent.

China’s Purchasing Managers’ Index was 50.1 in July, from 50.2 in June, according to an official report yesterday. That compared with the 50.5 median estimate of analysts surveyed by Bloomberg.

ECB Meeting

The European Central Bank may announce steps to tackle the region’s debt crisis following a meeting today after ECB President Mario Draghi pledged last week to do “whatever it takes” to preserve the euro.

“Traders are likely to stay cautious today, bracing for potential disappointment by the ECB in terms of stimulus measures,” said Lai.

In Hong Kong’s offshore market, the yuan gained 0.06 percent to 6.3820 per dollar, according to data compiled by Bloomberg. Twelve-month non-deliverable forwards fell 0.07 percent to 6.4345, a 0.9 percent discount to the spot rate in Shanghai, data compiled by Bloomberg showed.