BEIJING - The central parity rate of the Chinese yuan has dropped sharply by 3.5 percent over the last two days after the country overhauled its exchange rate formation mechanism on Tuesday.

The abrupt action taken by the People's Bank of China (PBOC), the central bank, marked the latest step in a decade of reforms on the yuan's exchange rate, which is closely scrutinized around the globe.

The following is a chronicle of major reform events over the last ten years.

-- July 21, 2005: China initiated the reforms by depegging the yuan from the US dollar. The PBOC said it had shifted to "a managed floating exchange rate based on market supply and demand with reference to a basket of weighted currencies." The yuan against the US dollar appreciated by 2 percent to 8.11 on that day.

-- July 22, 2005: The PBOC began announcing the yuan's closing rate against major currencies on the inter-bank foreign exchange market each trading day.

-- Jan 11, 2007: The central parity rate of the yuan against the US dollar topped 7.8. The yuan's value exceeded the Hong Kong dollar for the first time in 13 years.

-- May 21, 2007: The yuan's value was allowed to rise or fall by 0.5 percent from the central parity rate each trading day, from a previous limit of 0.3 percent.

-- April 8, 2009: Cross-border trade was allowed to be settled in the Chinese currency on a trial basis in Shanghai and Guangdong Province.

-- July 21, 2009: Four years since the exchange rate reform, the yuan against the US dollar had appreciated by 21 percent.

-- Aug 19, 2010: China started direct trading between the yuan and the Malaysian ringgit.

-- Sept 15, 2010: US lawmakers at a Congress hearing pressured China to appreciate its currency. China's Foreign Ministry said the yuan's appreciation would not help the Sino-US trade deficit.

-- Nov 22, 2010: China started direct trading between the yuan and the Russian ruble on the inter-bank foreign exchange market.

-- Dec 15, 2010: The yuan started trading in Russia, the first overseas market of the Chinese currency.

-- Jan 13, 2011: The PBOC allowed qualified domestic enterprises to invest in foreign countries directly using the yuan.

-- April 16, 2012: The yuan's value was allowed to rise or fall by 1 percent from the central parity rate each trading day, from the previous limit of 0.5 percent.

-- June 1, 2012: China started direct trading between the yuan and the yen on the inter-bank foreign exchange market.

-- April 9, 2013: China started direct trading between the yuan and the Australian dollar on the inter-bank foreign exchange market.

-- March 17, 2014: The yuan's value was allowed to rise or fall by 2 percent from the central parity rate each trading day, from the previous limit of 1 percent.

-- March 18, 2014: China started direct trading between the yuan and the New Zealand dollar on the inter-bank foreign exchange market.

-- June 18, 2014: China started direct trading between the yuan and the British pound on the inter-bank foreign exchange market.

-- Sept 30, 2014: China started direct trading between the yuan and the euro on the inter-bank foreign exchange market.

-- Nov 27, 2014: The vice PBOC governor at the time said the bank had "largely" withdrawn from intervention in daily foreign exchange business.

-- May 26, 2015: David Lipton, first deputy managing director of the International Monetary Fund (IMF), said the yuan was no longer undervalued while in Beijing.

-- June 27, 2015: The PBOC said it would continue to push ahead with reforms in the exchange rate formation mechanism.

-- Aug 11, 2015: The PBOC said daily central parity quotes reported to the China Foreign Exchange Trade System before the market opens should be based on the closing rate of the inter-bank foreign exchange market on the previous day, supply and demand in the market, and price movement of major currencies. The central parity rate of the yuan against the US dollar weakened sharply by 1,136 basis points to 6.2298.

-- Aug 12, 2015: The IMF described Tuesday's policy change as "a welcome step" that allows market forces to have a greater role in determining the exchange rate. The yuan-US dollar rate declined by 1,008 basis points to 6.3306.