The central parity rate of the Chinese currency renminbi, or the yuan, strengthened 92 basis points to 6.8806 against the U.S. dollar Tuesday, according to the China Foreign Exchange Trade System.
All eyes are fixed on the new U.S. president who drove the greenback to its strongest gain since mid-December last week, promising a "phenomenal" tax reform for U.S. companies. Investors hope that this signals a pick up in economic growth.
Thanks to resilient economic growth and improved government regulation, the yuan has generally stabilized from the sharp falls of last year and has begun to see more two-way fluctuations.
The yuan's volatility may continue as the market digests a slew of key economic data this week, including China's January inflation, GDP for the euro zone, British retail and employment figures, as well as U.S. retail and inflation figures.
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 central parity rate of the yuan against the U.S. dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.