The yuan edged higher against the dollar on Wednesday and was at its strongest level in 14 years versus major currencies in October, signalling China's intent to maintain the currency's value amid the global financial crisis.
Barack Obama's win in the US presidential election had little impact on the yuan's exchange rate, dealers said, though the outcome, which was largely expected, boosted the dollar. The US currency rose around 1 percent against a basket of major currencies in late Asian trade.
The yuan closed at 6.8282 per dollar on Wednesday, up from Tuesday's close of 6.8360. The Chinese central bank set the tone for the yuan's rise as it fixed the Chinese currency's daily mid-point against the dollar at 6.8240, slightly stronger than Tuesday's reference rate of 6.8261.
Figures released by the Bank for International Settlements late on Tuesday showed the yuan's nominal effective exchange rate (NEER), its value against a trade-weighted basket, jumped to a reading of 112.10 in October, its highest level since 1994 when China abolished an official exchange rate and allowed the yuan to float slightly in a "managed" system for the first time.
The reading indicated the yuan rose 3.49 percent in October against the basket, accelerating from a 2.36 percent rise in September. In the first 10 months of this year, the yuan's NEER jumped 13.42 percent, compared with a 1.69 percent gain in 2007 and a fall of 1.55 percent in 2006.
"The yuan's strong rise against the trade basket this year shows clearly that the Chinese government wants to defend the value of its currency amid falling prices of Chinese assets, partly sparked by the global financial crisis," said a dealer at a major Chinese commercial bank in Shenzhen.
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