The Chinese yuan went up against the greenback on Monday following the central bank’s fifth time in a row setting the currency higher setting the midpoint at its strongest in almost 11 months.
The yuan reached its best performance in a week since July of 2014 on the previous week, going up by 0.94 percent against the U.S. dollar. According to official data coming from the China Foreign Exchange Trade System, the yuan also went up by 1.26 percent on a trade-weighted basis against a group of currencies by its partners in trade.
According to the economist at the Singapore-based OCBC Bank Tommy Xie, the rallying Chinese currency may also be due to sentiment in the onshore market as well as the recently weakening dollar.
The People’s Bank of Chine increased its guidance for the country’s currency for the fifth time in a row on Monday’s session to 6.6601 a dollar, its strongest since September 2016 due to the broad weakening of the dollar.
The midpoint for Monday was 0.06 percent or 41 pips higher than Friday’s fix of 6.6642 although some markets say that this fix was lower than what they have anticipated. They added that the government may not want the Chinese yuan to strengthen too quickly.
Traders say that the increase in the yuan’s value is due to the persisting corporate dollar sales. The strong yuan also prompted traders to do some dollar bargain hunting which made the yuan weaker than the set midpoint in early trading.