The central parity rate of the Chinese yuan strengthened 492 basis points to 6.8939 against the US dollar on Dec 4, according to the China Foreign Exchange Trade System.
The appreciation was the largest since June 2017, while the new central parity rate was the strongest since Sept 28, 2018, data from the system showed.
Currently, yuan’s exchange rate is showing greater flexibility in two-way fluctuation, with exchange rate expectation staying generally stable, said Yi Gang, governor of the People’s Bank of China, in an article on Dec 3.
“The yuan’s exchange rate remains generally stable at a reasonable level near its equilibrium,” said Yi.
In China’s spot foreign exchange market, the yuan is allowed to rise or fall by two percent from the central parity rate each trading day.
The central parity rate of the yuan against the US dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.