The Chinese yuan is rising against the US dollar, prompting the country’s central bank to buy dollars.
The yuan rose 0.2% against the dollar earlier this week to 6.9964 yuan per US dollar, forcing the People’s Bank of China to take action, Bloomberg reports.
Sources familiar with the matter who wish to remain anonymous say Chinese banks have been seen buying greenbacks at a high rate of around 7.0067 yuan per dollar, although no specific details were mentioned.
According to the report, the Chinese yuan is heading for its best year in five years against the US dollar as the nation has strengthened its currency.
As Wang Qing, chief macroeconomic analyst at Golden Credit Rating International Co, states in the report:
“The yuan has been boosted by the weakness of the dollar and seasonal currency conversion by exporters. A sustained gain in the yuan will be helpful in increasing the attractiveness of China’s capital markets for foreign investors.”
Australia and New Zealand Banking Group senior strategist Xing Zhaopeng told Bloomberg he expects the yuan to maintain its momentum and remain between 6.95 and 7 against the dollar during the first half of next year, while other unnamed analysts said they believe the yuan is still undervalued.
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