The Chinese yuan rose to its strongest level in almost four weeks on Tuesday – a sign its depreciation trend may be a thing of the past, analysts say.
The yuan strengthened to about 6.22 per dollar after the central fixed the currency’s daily midpoint stronger than market expectations for a third straight day.
“Unexpectedly low fixings is a strong indication that we have seen the peak in USD/CNY,” said Irene Cheung, Asia FX Strategist at ANZ.
The PBOC controls yuan trading by fixing a daily midpoint from which it can rise or fall by 2 percent.
The move marks a departure from earlier this year when the People’s Bank of China (PBOC) engineered sharp yuan depreciation to shake out speculators betting on one-way appreciation.
“We have been of the view that a resumption of renminbi appreciation would occur over the second half of the year. This could now be earlier than we had anticipated,” she added.
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