The central parity rate of the Chinese yuan against the U.S. dollar fell for the fourth straight day on Thursday. The yuan weakened by 41 basis points to 6.4936 against the dollar on Thursday, according to the China Foreign Exchange Trading System.
In China's spot forex market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day. The central parity rate of the yuan against the U.S. dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.
Analysts attributed the fall to a stronger U.S. dollar mainly caused by the interest rate raise by the Federal Reserve, since the policy divergence between the Fed and other central banks has driven investment flows into the U.S. and boosted the greenback. However, China is capable of keeping the yuan stable at a reasonable level, as its improving economic data are underpinning the currency, said Lian Ping, chief economist with the Bank of Communications.
The International Monetary Fund's (IMF) decision to add the yuan to its reserve currency basket will also help keep the yuan's stability, as the membership in the IMF's SDR club would encourage more funds to flow into China, Lian said.
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