China strengthens yuan rate against dollar by 0.01%

[SHANGHAI] China's central bank on Monday raised the value of the yuan against the US dollar by 0.01 per cent, the national foreign exchange market said, after a devaluation last week rocked markets.

The daily reference rate was set at 6.3969 yuan to US$1.00, slightly stronger than Friday's 6.3975, the China Foreign Exchange Trade System said.

Chinese authorities keep a tight grip on the currency and it is only allowed to fluctuate up or down two per cent on either side of the reference rate.

Authorities had based the rate on a poll of market-makers, but last week shocked financial markets by suddenly cutting the value of the yuan nearly two per cent and moving to what they say is a more market-oriented system.

The mechanism now also takes into account the previous day's close, foreign exchange supply and demand and the rates of major currencies.

AFP