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April 30, 2016

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Yuan sees its biggest daily rise since 2005

CHINA yesterday raised the exchange rate for the yuan against the United States dollar by 0.56 percent from Thursday, its biggest increase in almost 11 years.

The People’s Bank of China fixed the yuan at 6.4589 to the dollar, according to the China Foreign Exchange Trade System, which operates the foreign exchange market.

It was the strongest daily increase in the rate since July 2005, Bloomberg News reported.

China allows the yuan to rise or fall only 2 percent on either side of a daily fix, to prevent volatility and maintain control over the currency.

“This is a reaction to the dollar weakness overnight and there’s not much in the way of policy intention to read into,” said Ken Cheung, Hong Kong-based currency strategist at Mizuho Bank.

The US dollar plunged against the Japanese yen on Thursday, after the Bank of Japan shocked markets by refraining from ramping up its stimulus.

“The expectation for a stronger yuan fix was laid by the gains for the yen after the Bank of Japan announcement,” said Patrick Bennett, a strategist at Canadian Imperial Bank of Commerce in Hong Kong.

The onshore yuan was quoted at 6.4729 to the US dollar yesterday, up 0.14 percent from Thursday.


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