China’s yuan rose the most in a week after the central bank boosted the reference rate to a level that meant the currency had to strengthen in order to stay within its permitted trading band.
The People’s Bank of China raised the daily fixing by 0.08 percent to 6.1318 a dollar, which was 2.06 percent stronger than the closing spot rate on Tuesday. The onshore exchange rate can deviate from the reference rate by a maximum 2 percent. Yuan depreciation won’t become a trend and the PBOC may step in to keep the exchange rate stable if the impact from capital flows becomes larger, according to a commentary in the official China Securities Journal on Wednesday.
The currency rose 0.16 percent to 6.2480 per dollar as of 12:19 p.m. in Shanghai, China Foreign Exchange Trade System prices show. That’s 1.86 percent weaker than the PBOC’s rate. The currency sank to an eight-month low of 6.2606 on Monday.