(Yicai Global) Jan. 18 -- The yuan's central parity against the US currency has risen 467 basis points to a two-month high after a decline in the dollar index.
The central parity in the interbank foreign exchange market today reached 6.8525, compared with 6.8992 yesterday, according to the China Foreign Exchange Trade System of the People's Bank of China.
The dollar's upward momentum stopped after it exceeded 103 in mid-December last year, insiders said. The rise was driven by frenzied and optimistic expectations about Donald Trump taking office, and as expectations cool the currency's rally is expected to stall.
The government's economic and financial data from December is generally in line with expectations, as the dollar index continues to weaken and fluctuate as it has over the past two weeks. With China's economic fundamentals and stable market sentiment, the yuan's exchange rate is expected to continue to rise amid fluctuations in the short term.
The yuan saw a sharp increase yesterday in both onshore and offshore markets after the dollar index slipped below the 101 threshold to hit a low of 100.7475. The onshore yuan-dollar exchange rate reached 6.8728 yesterday, rising 248 points from the previous day. It hit a one-week high of 6.8709 in intraday trading. The offshore rate at one point surpassed 6.8, up 600 basis points within the day.
The yuan's exchange rate against the dollar will remain stable ahead of China's Spring Festival at the end of the month, experts predict. If the dollar index continues to weaken in the short term, the yuan could see a moderate increase.