The central parity rate of the Chinese yuan rallied against the U.S. dollar Tuesday after it dipped for 10 trading days in a row, the longest period of consecutive falls since 2008. The central parity rate of the Chinese currency advanced by 10 basis points to 6.374 against the U.S. dollar on Tuesday, according to the China Foreign Exchange Trading System.
The yuan also strengthened against other major currencies, including the euro, Japanese yen and British pound. Before Tuesday's rally, the Chinese currency lost 596 basis points, or 0.94 percent, against the greenback in ten trading days. Official data over the weekend showed that China's new yuan funds outstanding for foreign exchange, an important gauge of cross-border foreign capital flow, ended a four-month decline in October.
The improvement indicated that foreign capital is coming back to China after the U.S. Federal Reserve did not hike interest rates as anticipated, partly contributing to the stabilization of the yuan. The IMF is expected to make its decision this month on whether to include the yuan in its Special Drawing Rights (SDR) basket, which will make the yuan more of an international currency. "The SDR inclusion will help prop up the yuan in the medium term," said a latest report by the investment bank CICC. It predicted that the yuan versus U.S. dollar will probably stabilize at 6.5 at the end of 2016.
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