(Yicai Global) Nov. 22 – The China Foreign Exchange Trading System's (CFETS) yuan exchange rate index has rebounded for two weeks in a row although the currency's recent depreciation against the dollar remains relatively pronounced and continues to exert pressure on the yuan, experts told Yicai Global.
"It means that during this period the added-up appreciation rate of yuan against the euroe, yen, pound and other currencies is greater than the rate of depreciation against the dollar," said Ding Zhijie, a professor at the University of International Business and Economics in Beijing.
Between Nov. 3 and 17, the yuan exchange rate against the dollar fell to 6.87 from 6.75, with a depreciation rate reaching 1,200 points. But the yuan exchange rate index was 94.54 on Nov. 18, an increase of 0.21 from 94.33 on Nov. 11. This is the second consecutive week the index rose after hitting a low of 93.78 on Nov. 4.
"While the yuan exchange rate against the dollar has depreciated, the yuan remained basically stable against a basket of currency exchange rates and saw a slight appreciation," according to an article re-posted on the central bank's website on Nov. 4. "Overall, the market is not worried about fluctuations in the yuan exchange rate."
Last December, the central bank launched the CFETS yuan exchange rate index, which is compiled based on the performance of 13 currencies including the euro, Australian dollar, and Mexican peso which trade with yuan directly.
CFETS yuan exchange rate index is aimed at guiding the market to shift its focus from the yuan's bilateral exchange rate with the dollar to a basket of currencies, among which the highest weighting are for the dollar, euro and yen, with 26.4 percent, 21.4 percent and 14.7 percent, respectively.