(Yicai Global) July 19 -- The yuan's central parity exchange rate hit a nine-month high of 6.7451 against the dollar today, compared to 6.7611 the previous trading day. The surge was triggered by robust domestic economic growth data and a weak dollar.
The yuan-dollar exchange on the offshore market stood at 6.7538 at about 11.18 a.m., close to the new high set at the end of May.
Traders remain bullish about the short-term spot exchange rate of the yuan, based on the frequently dropping dollar index and institutions' increased spontaneous exchange settlements. Rebound resistance is likely to rise slightly with foreign exchange purchases driven by real demand.
China's strong second quarter economic growth data has boosted confidence for a long position in the yuan, analysts say. The yuan-dollar exchange rate is expected to maintain its strong momentum in the short-term due to a soft dollar index in the international market and relatively stable foreign exchange purchasing at home.
The short-term focus is still on whether foreign exchange settlement is balanced. While last week's National Financial Work Conference, a meeting of Chinese regulators and policymakers staged every five years, exerts a short-term impact on a psychological level, its medium-term impact still requires further observation.
The weak dollar provides strong support for the robust performance of the yuan, and the recent bleak US economic data and dovish testimony of US Federal Reserve Chair Janet L. Yellen have lowered expectations for a third rate hike this year. Donald Trump's new health care bill has also suffered setbacks.
The above factors also saw the overnight dollar index fall as low as 94.55, marking a new low since the week ending Sept. 9, 2016.