The yuan gained to 7.1612 against the US dollar on Monday, its highest value since mid-August. Analysts said the yuan may see further appreciation in December.
On Monday, the central price of the yuan against the US dollar was 7.1612, up 116 basis points, according to a notice published by the China Foreign Exchange Trade System (CFETS). The rate had previously reached 7.2150 on September 8.
Weakening of the US dollar is the direct driver of the appreciation of the yuan exchange rate, and the decline of the US Treasury interest rate is the main reason for the weakening of the US dollar, analysts said.
Since November 1, the onshore yuan has appreciated 1.4 percent and offshore yuan has appreciated 1.6 percent, while the US dollar index has weakened by 2.7 percent.
The fundamentals of the US economy may continue to weaken, and the signs of stabilization in China’s economy are increasingly clear. The financial data for October reflected the continued recovery of domestic demand in China, market observers said.
To support the steady growth of the real economy, Chinese monetary policy will always remain stable and create a sound monetary and financial environment. There is still the possibility of lowering the reserve requirement ratio this year to ease financing costs for the real economy, observers noted.
According to information from China’s central bank on November 13, the scale of social financing and yuan loans saw a year-on-year increase in October.
The bank's foreign exchange settlement reached 1.1516 trillion yuan ($160.6 billion) in October and foreign exchange sales reached 1.2057 trillion yuan, meaning that China's cross-border capital flows are becoming more balanced.