The yuan hit its highest level against the dollar since its 2005 revaluation on Friday after the Chinese central bank set its daily mid-point, or reference rate, at a post-revaluation high.
The choice of mid-point appeared to confirm the central bank was still keen to appreciate the yuan faster this year to fight inflation - and ended remaining speculation that an intra-day plunge of the yuan on Wednesday might have indicated a policy change.
The central bank fixed the mid-point at 7.1763, up from Thursday's 7.1890 and exceeding the reference rate's previous post-revaluation peak of 7.1846, hit on February 5.
"In setting such a high mid-point today, the central bank seems to want to give the yuan more upward momentum in the near term, to compensate for the loss of time when the market was closed during the Lunar New Year holiday," said a dealer at a Chinese commercial bank in Shenzhen. Many traders think the People's Bank of China sets a rough target for how much the yuan should rise each month, based on economic conditions at the time.
So the yuan may have to rise faster in the second half of February to make up for the week-long holiday in the first half. The yuan hit a post-revaluation high of 7.1760 in early trade on Friday, before pulling back a bit to trade at 7.1820 around midday, still up from 7.1904 at Thursday's close.
Comments
Comments are closed.