Mainland China strengthens yuan against US dollar, putting end to fall
Mainland China’s central bank on Friday raised the value of the yuan against the U.S. dollar by 0.05 percent, the national foreign exchange market said, ending three days of falls after a surprise devaluation.
The daily reference rate was set at 6.3975 yuan to $1.0, from 6.4010 the previous day, the China Foreign Exchange Trade System said.
The yuan closed at 6.3912 on Friday, strengthening slightly from Thursday’s close of 6.3982.
The higher fixing for the yuan came after mainland China’s People’s Bank of China (PBoC) reassured financial markets by pledging to seek a stable currency after a shock devaluation of nearly two percent on Tuesday.
The cut, and two subsequent reductions, sent global financial markets into a tailspin as it raised questions over the health of the world’s second-largest economy and sparked fears of a possible currency war.
Beijing said the move was the result of switching to a more market-oriented method of calculating the daily reference rate which sets the value of the yuan, also known as the renminbi (RMB).
Previously, authorities based the rate on a poll of market-makers, but will now also take into account the previous day’s close, foreign exchange supply and demand and the rates of major currencies.
The yuan is still only allowed to fluctuate up or down two percent on either side of the reference rate.