Yuan rebounds against U.S. dollar on official support

Updated 2016-11-29 09:55:32 Global Times

Central bank sets central parity rate higher after greenback retreats

The central parity rate of the yuan on Monday rose by the largest amount since November 9 after a central bank official voiced support for the currency.

The yuan strengthened 126 basis points against the U.S. dollar in early trading on Monday to 6.9042, according to the China Foreign Exchange Trade System. On Friday, the yuan had fallen to its lowest rate against the U.S. dollar since June 2008.

In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.

"The change on Monday could be read as tactical revision," said Dong Dengxin, director of the Financial Securities Institute at Wuhan University of Science and Technology.

"The yuan has been falling continuously for some time, and some believe the target is 7 yuan a dollar. It could be that some market participants decided it was time for a tactical rebound before the target is reached," Dong told the Global Times Monday.

The yuan's exchange rate will continue to be kept basically stable at a reasonable and balanced level, Yi Gang, deputy governor of the People's Bank of China, the central bank, said in an exclusive interview with the Xinhua News Agency on Sunday.

Yi said the recent appreciation of the U.S. dollar reflected the acceleration of U.S. economic growth, stronger expectations for inflation, and signs that the U.S. Federal Reserve will raise interest rates at a faster pace in the future.

The yuan's fluctuations against the U.S. dollar have widened of late, Yi said, due to external factors such as Donald Trump's victory in the U.S. presidential election, the UK referendum to leave the EU and Egypt's decision to let its currency float freely.

These factors caused capital to flow back to the U.S., lighting a fire under the Dollar index and the U.S. stock market, causing global currencies to weaken against the greenback.

Among them, Yi pointed out, the yuan is still showing the traits of a stable and strong currency.

Since October, the Japanese yen, the euro and the Swiss Franc weakened against the dollar by 10.5 percent, 5.8 percent, and 4.2 percent, respectively.

Among emerging economies, the Malaysian ringgit, the South Korean won, the Mexican peso weakened against the dollar by 7.2 percent, 6.5 percent, and 6.1 percent, respectively.

By comparison, the yuan weakened by 3.5 percent against the dollar, and the percentage is less than half of the gain in the Dollar index.

Since October, the yuan has strengthened against several currencies. For example, it strengthened by 7.5 percent against the yen.

China has always emphasized that the value of the yuan should be gauged against a basket of currencies, Yi said, noting that the country's foreign exchange reserves, though declining, remain ample.

Also in the News

Nicole Kidman Recalls Oscar Glory: Loneliest Time
Showbiz2016/06/16 13:58May 22 2017 23:26:05

Nicole Kidman Recalls Oscar Glory: Loneliest Time

Attending Shanghai International Film Festival, Nicole Kidman talks about her role in "Grace of Monaco".

Labor Day Travel Peak Starts
Also in the News2014/05/01 12:16May 22 2017 23:26:05

Labor Day Travel Peak Starts

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'
Also in the News2014/04/18 13:18May 22 2017 23:26:05

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'

Hollywood star Johnny Depp's speech in the upcoming new film "Transcendence" has been disclosed on Friday, April 11th.

Most Watched

News:
China World Business Sports Showbiz Audio
Video:
C4 My Chinese Life The Sound Stage China Revealed Showbiz Video Travel Video
Photos:
China World Fun Travel Entertainment Sports
Travel:
Beijing Shanghai Guangzhou
Lifestyle:
Live Music Opera & Classical Movies Traditional Shows Exhibitions
Learn Chinese:
Chinese Studio Living Chinese Everyday Chinese Just For Fun Chinese Culture Buzzwords