Chinese yuan strengthens to 6.7126 against USD on Monday

A bank staff counts RMB and US dollar notes in a bank in Nantong, Jiangsu province on Aug 6, 2019. (Photo: Sipa)

BEIJING, Oct. 12 (Xinhua) -- The central parity rate of China's currency the renminbi, or the yuan, strengthened 670 pips to 6.7126 against the U.S. dollar on Monday, according to the China Foreign Exchange Trade System.

In the first three quarters of this year, the onshore yuan strengthened nearly 4 percent against the U.S. dollar.

China's central bank on Monday reduced the foreign exchange risk reserve ratio for forward forex sales from 20 percent to zero, the central bank said in an online statement.

The ratio is often used as a counter-cyclical tool and the move is expected to prevent the yuan's excessive appreciation or depreciation, said Wen Bin, chief analyst at China Minsheng Bank.

"The adjustment will help the yuan's exchange rate against the U.S. dollar remain at a reasonable and balanced level," said Wen, adding that the Chinese currency has recently seen significant appreciation alongside the country's improving economic fundamentals.

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

The yuan's central parity rate 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.