The central parity rate of the Chinese yuan strengthened 139 basis points to 6.8710 against the US dollar on Thursday, according to the China Foreign Exchange Trade System.
The strengthening came amid signs of the central bank’s policy tightening. On Thursday, the People’s Bank of China (PBOC) suspended open market operations for a fifth-consecutive trading day, Xinhua news agency reported.
“Liquidity in the banking system remains at a relatively high level. To maintain stable liquidity, the central bank will not conduct reverse repos on February 9,” the central bank said in a statement.
Reverse repos is a process for the central bank to purchase securities from commercial banks with an agreement to sell them back in the future.
China will maintain medium-high economic growth, current account surplus, sound fiscal conditions and a stable financial system, continuing to support the yuan to become a stable and strong currency, the State Administration of Foreign Exchange said on Tuesday.
In China’s spot foreign exchange market, the yuan is allowed to rise or fall by 2% from the central parity rate each trading day.
The central parity rate of the yuan against the US dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.