The Chinese yuan Friday softened mildly against the U.S. dollar which was pushed up by U.S. President Donald Trump's tax cut plan and encouraging U.S. economic data.
The central parity rate of the Chinese currency renminbi, or the yuan, stood at 6.8819 against the U.S. dollar, weakening from 6.871 on Thursday, according to the China Foreign Exchange Trade System.
The White House said that Trump plans to unveil comprehensive tax reforms in the next few weeks to lower the overall tax burden, which boosted U.S. stock prices and sent the dollar higher against a basket of currencies.
U.S. jobless claims fell to near a 43-year low and wholesale inventories surged for a second straight month, suggesting improved confidence in the economy.
Despite slipping against the dollar, the yuan's exchange rates to many other major currencies strengthened, including the Euro, Japanese yen, British pound, Australian dollar and Swiss franc.
Analysts believe the yuan is seeing less depreciation pressure and will likely remain generally stable in the short term due to lingering uncertainties on the U.S. dollar and policies from the Trump administration.
Thanks to resilient economic growth and improved government regulation, the yuan has generally stabilized from the sharp falls of last year and begun to see more two-way fluctuations.
China's central bank has raised lending costs for major banks and, for several days, suspended injecting liquidity into the money market, moves expected to further ease pressure on the yuan and foreign exchange reserves.
In China's spot foreign exchange 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.
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