The central parity rate of the Chinese yuan against the US dollar was 6.8431 on Tuesday, advancing by 82 basis points and ended the lows recorded in more than one year.
This reversed the currency’s downward trend on Monday and last Friday, which saw a respective loss of 191 and 380 basis points.
At around 7:45 pm on Tuesday, China’s offshore yuan strengthened against the greenback above the mark of 6.83, rising over 500 basis points from the low of the day.
A little earlier, the onshore yuan also rose to 6.83 against the US dollar, jumping nearly 300 basis points within the day. At 23: 30 on August 7, the onshore yuan closed at 6.8332, up 198 basis points from the end of Monday’s night session.
The surge came after media reports that the People’s Bank of China (PBC) called for major banks in the currency market to fend off further volatility. The central bank claimed that it has confidence in maintaining yuan’s stability.
PBC said that it will seek to keep the flexible exchange rate system and two-way floating regime “unchanged” and will adopt some regulatory tools if necessary, according to a Sina.com report.
Last Friday, the central bank announced that it would raise the reserve requirement ratio from an earlier zero to 20 percent from August 8 for financial institutions settling foreign exchange forward yuan positions, which sent the currency rocketing while pulling the US dollar sharply.
The Chinese yuan has fallen almost 10 percent since early April in offshore markets, as concerns about the Sino-US trade relations continue to rattle the market.
Cover image: Shine.cn