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China’s yuan strengthens to 10-month high against US dollar

Updated: Aug 10,2017 5:07 PM     Xinhua

BEIJING — The central parity rate of the yuan strengthened 305 basis points to 6.6770 against the US dollar on Aug 10, its highest level in more than 10 months.

This came following a rise of 109 basis points on Aug 9, according to China Foreign Exchange Trade System.

Analysts attributed the yuan’s rally partly to a weaker US dollar.

Judging from the comparative depreciation of the US dollar, the yuan may continue to rise slightly this year, according to China International Capital Corporation.

The yuan is also supported by economic data which pointed to latest restructuring achievements and provided fresh stabilization signs for the Chinese economy, said analysts.

China’s economy expanded 6.9 percent on H1, with consumption and services, together with new innovation-driven economic sectors, taking up larger roles in the economy.

The People’s Bank of China said on Aug 7 that foreign exchange reserves rose for a sixth month in July to hit $3.1 trillion, increasing $23.9 billion from a month earlier.

It is the first time since June 2014 that the reserves have expanded for six straight months.

Despite a slowdown in expansion, total foreign trade reached 2.32 trillion yuan (about $346 billion) in July, the third largest this year following that in May and June.

Consumer and factory-gate inflation held steady. The CPI rose 1.4 percent year on year in July, the National Bureau of Statistics (NBS) said on Aug 9.

PPI rose 5.5 percent year on year in July, unchanged from the previous two months.

Under the market-based, managed floating exchange rate system, the yuan can rise or fall by 2 percent against the US dollar from the central parity rate each trading day.

The central parity rate is a weighted average of quotes from dealer banks, and follows a formula based on the previous day’s closing rate and changes in a basket of selected currencies.